The Government of India has made it mandatory for corporates over ₹500 crore turnover to follow e-invoicing for GST. SAP offers capabilities to implement GST e-invoicing in India. A best-practice driven implementation plan can help you comply with the regulations and achieve optimal benefits.
Electronic invoicing or e-invoicing addresses a broad range of issues like operational cost control, mailroom management challenges and handling billing disputes that are top priorities for all businesses across the globe. Automating e-invoicing offers several benefits to the companies, including speedy processing, quick invoice delivery and faster payment collection.
In India, GST e-invoicing has been made mandatory from October 1, 2020, for all large corporates having an aggregate turnover of more than ₹500 crore. And there are consequences for non-compliance. If an invoice is not registered on a notified Invoice Registration Portal (IRP), then such an invoice would not be considered as a valid GST invoice. Subsequently, it would attract a penalty of ₹10,000.
Since every GST invoice needs to be validated for e-invoicing, this requires the transformation of existing accounting software and rethinking of related processes for a successful adaptation to the new requirement. Businesses that have deployed SAP ERP solutions can easily move into the new environment. However, executing a successful GST e-invoicing project may seem daunting. The reality is that with the right strategy and best-practices driven implementation plan, GST e-invoicing can be achieved.
Before we come to the best practices in SAP GST e-invoicing in India, let’s quickly discuss what is GST e-invoicing, its requirements and the role of SAP for businesses to implement it.
The GST e-invoicing in India mandates registration of all invoice details of all B2B customers on a centralized portal. It involves uploading of invoice details in JSON format with the required schema on a notified IRP where key invoice particulars would be validated and a unique number called IRN (Invoice Reference Number) along with a digitally signed QR code will be issued and the particular invoice will get the status of a Government validated document.
Currently, invoices by supplier, credit notes by the supplier and debit notes by the recipient are covered under GST e-invoicing in India. Moving to GST e-invoicing won’t be difficult for organizations that have SAP ERP system.
If your business is facing issues implementing the SAP GST e-invoicing system or is looking for a partner, then we can help you. We are a global partner for SAP with deep authority in SAP products and solutions. To know about our SAP services click here.
Here are a few best practices to help you to speed up your SAP GST e-invoicing implementation plan.
- Take Care of the Pre-Requisites First: There are certain prerequisites before moving to GST e-invoicing like migration to TAXINN, a condition-based tax process, from TAXINJ, a formula-based tax procedure. SAP has already released detailed information on this. You also need to upgrade to the required support package level for your release. Also, check if all your buyers and suppliers have a valid GST identification number.
- Maintain Master Data: There are various changes to master data and the fields for identification and rate determination. Please ensure that the GST registration number is to be captured for each registered customer and vendor, For purchases, the tax indicator field in material master checks if a particular material falls under GST or not, for sales, the tax classification field identifies if the material comes under GST. For vendor master, a new field in the CIN details tab is created to identify it is part of GST and similarly existing tax classification field to identify the customer for GST. Ensure that your GST checks are working perfectly to identify materials, vendors and customers.
- Customize SAP GST Settings: SAP offers customization choices in pricing procedures and other areas to accommodate the specific needs of the business. Please check all the customization options available to you and implement those that are applicable to your business.
- Prepare Your Accounting Team: While GST e-invoicing is a government mandated change, it is necessary to make your people aware of the change in process, explain various benefits of GST e-invoicing and any changes in their roles and responsibilities. Also asking for suggestions will help you get everyone involved in it.
- Find an Experienced SAP Partner: SAP GST e-invoicing being new to India, it may look daunting for businesses. An experienced SAP GST partner will help you quickly and successfully shift to the new environment. Look for a partner with experience in SAP invoice automation and someone that offers end-to-end services.
The government mandated GST e-invoicing in India is a step towards tax reforms. But it also brings several benefits to businesses. It automates invoice generation, facilitates seamless data flow across the organization, and drives faster payment collection thereby ensuring better cash flow.