E-invoicing and ITC Claim: Positive Impact of E-invoicing on GST Reconciliation & ITC | 5 ways in which e-invoicing will help in faster and better reconciliation https://einvoice6.gst.gov.in/content/e-invoicing-and-itc-claim-positive-impact-of-e-invoicing-on-gst-reconciliation-itc/

1. E-invoicing and ITC Claim:
Positive Impact of E-invoicing
on GST Reconciliation & ITC

2. E-invoicing and ITC Claim have got interconnected since the introduction of the e-invoicing
mandate rolled out in October 2020.
The present e-invoicing turnover limit requires taxpayers with turnover above Rs. 10 Cr to
register their sales invoices with Invoice Registration Portals (like IRIS IRP) and obtain a
unique Invoice Reference Number (IRN) along with a QR code before sharing it with the
purchaser. And purchaser has to ensure that the invoice received has the QR Code printed
on it, as now, invoices with an IRP-authorized IRN and digitally signed QR Code will only be
considered as valid.
As a compliance task, the generation of invoice is responsibility of the supplier and
reconciliation of the invoice with purchase data is recipient’s responsibility for accurate ITC
claim. Thus, the underlying document for ITC claim is the invoice generated and uploaded
by the supplier on the GST system.

3. E-Invoicing and ITC Claim – Positive
Impact
With e-invoicing coming in play, it has a direct impact on GST
reconciliation and ITC claim as henceforth, ITC will be available only on
IRP-generated invoices.
Here are 5 ways in which e-invoicing and ITC Claim will get
interconnected and e-invoicing will help in faster and better GST
reconciliation and hence efficient ITC claim
1. Real-time availability of e-invoice for ITC Claim
Under the E-invoice mandate, e-invoice needs to be generated before the
document is shared with the customer, thus making it a transactional
level compliance. Hence, suppliers need to send the invoice data to IRP,
get IRN and QR Code in return and print this QR Code on the invoice
before it is issued. Hence, every invoice issued under e-invoicing is
available in system real-time. This data is available for purchasers to
view.

4. 2. E-Invoice is not just document but interoperable data set
Thus businesses can define process to reconcile their records with invoice data
as soon as the e-invoice is made rather than waiting for the invoice data to be
made available via GSTR 2B.
E-invoice is a not only a process change but also form change. The invoice which
was previously available as a physical copy or pdf has now transformed to data
set of relevant values. Thus, one can start looking at invoice being available as
data rather than as a document.
Once the e-invoice is generated, the supplier can exchange the complete e-
invoice data with the recipient digitally. This exchange can be completely
automated with IRP (Invoice Registration Portal) acting as facilitator in between.
Suppliers can thus feed the e-invoice data directly into the recipient’s systems.
The purchase ledgers get auto-populated and reconciliation activities can be
started earlier.

5. 3. Standardized information from all vendors
Everyone covered under the E-invoice mandate need to follow the same e-
invoice standard. The structure of IRN and B2B QR code format is also the same
for any e-invoice.
This standardization will address the inefficiencies of extracting the data from
the vendor-specific documents before it can be reconciled. Time and cost
savings due to the standard e-invoice processing can be significant.
4. Better invoice matching in GST Reconciliation
Currently, matching the invoices in purchase registers with GSTR 2A and GSTR
2B which also has ITC related computations, is a critical activity that taxpayers
need to do for maximizing ITC claim. Businesses usually use invoice number,
invoice date, and GSTIN of the counterparty as the common factor between two
data sets to identify comparable invoices. The matching of actual data is the
next step once comparable invoices are found.

6. One of the biggest challenges in GST reconciliation has been to identify the comparable
invoices because of manual or recording errors in capturing invoice number etc in 2
different data sources- supplier and recipient. This will change with e-invoicing coming
into play.
Under e-invoicing, once the supplier generates e-invoice from any of the IRP, IRPs need to
send e-invoices generated by them to the GST system. The auto-population of GSTR 1 for
supplier and GSTR 2A/2B for the recipient will be done post receipt of data from IRPs by
the GST system. If this e-invoice data can be directly pushed in purchase ledger,
comparable invoices can be found easily and scope of data discrepancies get reduced.
This is where Private IRP like IRIS IRP can help.

7. 5. Proactive issue resolution leading to faster turnaround time
The goal of GST reconciliation is to identify gaps and resolve the issues so that
ITC claim can be maximized. With availability of e-invoice data real-time, internal
checks can be setup to provide for faster processing of invoice reconciliation.
Thus any discrepancies which can put ITC at risk such as mismatch in tax
amount or POS (place of supply) etc can be reported to the supplier
immediately.
There is a window of 24 hours to cancel the e-invoice. Identifying and
communicating issues early enough will help to take corrective actions and
ensure ITC is claimed in the same period.

8. Thank You
Also Read This Full Article :- E-invoicing and ITC Claim: Positive
Impact of E-invoicing on GST Reconciliation & ITC