{"id":16516,"date":"2020-11-21T17:02:11","date_gmt":"2020-11-21T11:32:11","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=16516"},"modified":"2023-03-18T14:28:15","modified_gmt":"2023-03-18T08:58:15","slug":"implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/","title":{"rendered":"Implementation of IT Infrastructure by MSMEs to Support Electronic Invoices"},"content":{"rendered":"\n<p>\u2018Electronic Invoices\u2019 or \u2018E-invoicing\u2019 is basically a type of electronic billing, which plays a significant role in the GST framework.<\/p>\n\n\n\n<p>Recently, the Central Government by way of a<strong> Notification No. 88\/ 2020 <sup><a href=\"https:\/\/incometaxindia.gov.in\/communications\/notification\/notification_88_2020.pdf\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong>, dated 10.11.2020, has declared that the facility of electronic invoicing or e-invoicing is going to be compulsory for every business that has an annual business turnover of Rs 100 crores or more. However, as per the previous regulations, the said limit was 500 crores.<\/p>\n\n\n\n<p>In this blog, we will discuss in detail the implementation of IT Infrastructure by <strong><a href=\"https:\/\/swaritadvisors.com\/msme-registration\" class=\"text-primary\">MSME<\/a><\/strong> to Support Electronic Invoices.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a8bc67ed6a\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a8bc67ed6a\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Concept_of_Electronic_Invoicing\" title=\"Concept of Electronic Invoicing\">Concept of Electronic Invoicing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Applicability_of_Electronic_Invoicing_in_MSME_Sector\" title=\"Applicability of Electronic\nInvoicing in MSME Sector\">Applicability of Electronic\nInvoicing in MSME Sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Benefits_of_Electronic_Invoicing\" title=\"Benefits of Electronic Invoicing\">Benefits of Electronic Invoicing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Need_for_Implementing_IT_Structure_in_MSME_Sector\" title=\"Need\nfor Implementing IT Structure in MSME Sector\">Need\nfor Implementing IT Structure in MSME Sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Anticipated_Challenges_for_Small_Businesses\" title=\"Anticipated\nChallenges for Small Businesses\">Anticipated\nChallenges for Small Businesses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Different_Views_on_Electronic_Invoicing_in_MSME_Sector\" title=\"Different\nViews on Electronic\nInvoicing in MSME Sector\">Different\nViews on Electronic\nInvoicing in MSME Sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Expected_Outcomes_of_Electronic_Invoicing_in_MSME_Sector\" title=\"Expected Outcomes of Electronic\nInvoicing in MSME Sector\">Expected Outcomes of Electronic\nInvoicing in MSME Sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/implementation-of-it-infrastructure-by-msmes-to-support-electronic-invoices\/#Official_Notification\" title=\"Official Notification\">Official Notification<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Electronic_Invoicing\"><\/span>Concept of Electronic Invoicing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term GST e-invoice or electronic invoicing means the digital invoice or the standard format of invoices, which is generated on the GST portal for the goods and services provided by the business firms. Further, the main reason behind the implementation of GST e-invoice generation mechanism is to reduce the cases of GST evasion.<\/p>\n\n\n\n<p>Also, the mechanism of e-invoicing will\nbe applicable to only those who have crossed the threshold of annual business\nturnover set by the government.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability_of_Electronic_Invoicing_in_MSME_Sector\"><\/span>Applicability of Electronic\nInvoicing in MSME Sector<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Earlier, the business that used to generate the annual business\nturnover of Rs 500 crores or more were required to generate business invoices\nby the method of e-invoicing. <\/p>\n\n\n\n<p>However, after the issuance of the notification, the said limit has now been reduced to Rs 100 crores. That means the small businesses that were not required to bother about e-invoicing are now upgrading their IT (Infrastructure Technology) mechanisms to adhere to the rules and regulations prescribed by the government. <\/p>\n\n\n\n<p>Also, it shall be pertinent to state that there are some privileged\nsectors who need to generate electronic invoices. The term \u201cPrivileged Sectors\u201d\ninclude SEZ units, NBFCs, Insurance Companies, Goods Transport Dealers, Cinema\nHouses, Passengers Transport Services, etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_Electronic_Invoicing\"><\/span>Benefits of Electronic Invoicing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The benefits of Electronic Invoices are as follows:<\/p>\n\n\n\n<ol><li>Simplified GST Compliance<\/li><li>Precision in Work<\/li><li>Lesser Reconciliation Errors<\/li><li>Price Reduction<\/li><li>Minimized Paperwork and Documentation<\/li><li>Provides Effective Functioning of Capital Performance.<\/li><li>Improves Business Efficiency<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Need_for_Implementing_IT_Structure_in_MSME_Sector\"><\/span>Need\nfor Implementing IT Structure in MSME Sector<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the views expressed by various\ntax experts, the decision of the Central Government to reduce the threshold\nlimit for e-invoice compliance from Rs 500 Crores to Rs 100 Crores is in\nharmony with the original plan introduced by the GST Implementation Committee.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Anticipated_Challenges_for_Small_Businesses\"><\/span>Anticipated\nChallenges for Small Businesses<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The major challenge\nthat has been anticipated by the industry trackers for the small businesses is\nthat they require huge investment for IT Infrastructure that, too in the limited\ntime frame, i.e., within a period of 50 days, starting from the date of\nnotification. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Different_Views_on_Electronic_Invoicing_in_MSME_Sector\"><\/span>Different\nViews on Electronic\nInvoicing in MSME Sector<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to Mr Abhishek Jain, Tax Partner, Ernst and Young India, as per the recent declarations made by various Government officials, e-invoicing or electronic invoice has now been notified for Rs 100 crore and above for MSME companies as well. Further, due to the period of approx. 50 days, these mid-size companies will need to soon gear up their IT systems\/ mechanisms or processes to facilitate compliance with this new invoicing regulation.<\/p>\n\n\n\n<p>As\nper Mahesh Jai Singh, Partner and Leader of Indirect Tax, Deloitte India, \u2018This\napproach of implementing the requirement in a phased manner has been a decent\nmove, permitting the system to stabilize and offering the MSME\u2019s an additional time\nperiod of 3 months to introduce the changes to their IT systems.\u2019<\/p>\n\n\n\n<p>Further\nMr Mahesh Jain Singh, stated that the larger\ncompanies and entities that have successfully implemented and adhered with the\nnew requirement will now have to shift their focus on the procurement process.\nAlso, the robust mechanisms and checks are required to be kept in place to make\nsure that all the vendors who need to comply based on the revised limit from\n01.01.2020 provide them with valid e-invoices.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Expected_Outcomes_of_Electronic_Invoicing_in_MSME_Sector\"><\/span>Expected Outcomes of Electronic\nInvoicing in MSME Sector<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The expected outcomes of Electronic\ninvoicing in MSME Sector are as follows:<\/p>\n\n\n\n<ol><li>Facilitates tracking of the issuance of fake invoices.<\/li><li>Abolishes fraudulent credits taken by business entities more strictly.<\/li><li>Provides blocking of Tax Credit Score of suspected firms.<\/li><li>Allows set off of ITC (Input Tax Credit) with future tax obligations.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, although the MSMEs or small businesses generate high revenue and income for the Government collectively but are highly vulnerable and fragile on an individual level. As a result, exposing these businesses with heavy changes might turn out severe for them. <\/p>\n\n\n\n<p>Therefore, for bringing any change in the system, these entities not only require to upgrade their knowledge and skills level but need to reframe their system as well.<\/p>\n\n\n\n<p>However,\nit shall be relevant to note that it is not easy for MSMEs and small businesses\nto adapt to new changes with limited or restricted\nresources, even though there are some benefits for MSMEs in the New System as\nwell.<\/p>\n\n\n\n<p>Also, the new mechanism for <a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/gst-return-filing\"><strong>filing GST Return<\/strong><\/a> does not hamper the privileges offered to the MSMEs, and in fact, the actual implementation of the system will paint out a clearer picture of the real effects of the new system.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/procedure-required-for-msme-registration-in-india\/\">What is the Procedure Required for MSME Registration in India?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Official_Notification\"><\/span>Official Notification<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<a href=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/11\/notification-88-2020-MSME.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">notification-88-2020-MSME<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u2018Electronic Invoices\u2019 or \u2018E-invoicing\u2019 is basically a type of electronic billing, which plays a significant role in the GST framework. Recently, the Central Government by way of a Notification No. 88\/ 2020 [1], dated 10.11.2020, has declared that the facility of electronic invoicing or e-invoicing is going to be compulsory for every business that has [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":16520,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[141,1],"tags":[922],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/16516"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=16516"}],"version-history":[{"count":15,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/16516\/revisions"}],"predecessor-version":[{"id":19090,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/16516\/revisions\/19090"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/16520"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=16516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=16516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=16516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}