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The Indian Goods & Services Tax (GST) Council has an e-invoice reporting obligation (in JSON format). The good news for those mid-sized taxpayers is that our clients that exceeded that threshold have our Indian e-invoicing SAP add-on operational in advance of the deadline of November 1, 2020. That means we have a proven concept for (prospect) clients that are currently below the threshold and are part of the next wave.

The government introduced the e-invoicing system on October 1, 2020 for businesses with an annual turnover over Rs 500 crore. By January 1, 2021, it will be available to taxpayers with an annual turnover over Rs 100 crore.

The Indian government will roll out the electronic invoicing (e-invoicing) system for all business-to-business (B2B) transactions under the Goods and Services Tax (GST) regime from April 1 next year that will replace physical invoices.

What do we offer

We have developed an SAP-integrated solution with the cockpit to select reportable outgoing invoices, create periodic Indian e-invoicing, E-submission of Indian JSON files, and control reports and the functionality. Although not yet a mandatory requirement, the solution is ready for FI invoicing. We can add the QR Code, IRN, into the SAP script. The other key GST processes features we developed for optimum GST management are electronic waybill ('E-way bill') and GST returns, GST reconciliations and GST input credit utilization against its eligibility.


Extra features we developed for optimum GST management in India

To combat GST fraud a new weapon is introduced to ensure indirect tax compliance: e-invoicing. The aim of e-invoicing introduction is to avoid fake invoicing. The other key GST processes are electronic waybill ('E-way bill') and GST returns, GST reconciliations and GST input credit utilization against its eligibility.

E-way bill' feature in SAP add-on'

Our SAP add-on will include in the premium package 'E-way bill' functionality. That obligation is in India, often a manual exercise, and via our SAP add-on, we not only bring it all in SAP but as well automate the process.

GST return & GST reconciliation feature in SAP add-on'

A taxpayer is only allowed to deduct GST input credit when his vendor has uploaded the sale invoice to the GST system. A taxpayer can be obliged to reclaim input GST not now but in a next GST return if his vendor has failed to upload the invoice in time into the GST portal. When you do not monitor those shifts automatically as our feature does, GST input credit might not be recovered at all and become an expense.

Our SAP add-on has a link to the GST system whereby all the unclaimed GST input invoices will be reconciled on a day to day basis. A client will be able to generate a report and deduct the GST input according to the GST rules at the right time and take action when GST vendor invoices are not on the GST system by rejecting the invoices for payment.


What is it all about?

The Indian Goods & Services Tax Council has proposed a revised plan for the roll-out of live e-invoice reporting from 2020 of business to business (B2B) and businesses to consumers (B2C) invoices to the GST System. The regulation will be mandatory for large and mid-sized taxpayers by October 2020 (introduction was scheduled on 1 April 2020 but postponed due to Coronavirus outbreak):

  • Registered persons with an aggregate turnover in a financial year exceeding INR 1 billion must undertake e-invoicing concerning the supply of goods or services or both to a registered person (i.e., B2B supplies)
  • Registered persons with an aggregate turnover in a financial year exceeding INR 5 billion are required to have a Quick Response (QR) code on their invoices issued to an unregistered person, (i.e., B2C invoices)

A requirement is that an e-invoice is created in the taxpayer SAP system. The taxpayer submits that GST e-invoice to the 'Invoice Registration Portal' (IRP). That IRP of GST will generate a unique Invoice Reference Number (IRN), and digitally sign the e-invoice and also generate a QR code.

The digitally-signed invoice will be processed in the GST Network and e-waybill system within 24 hours. The taxpayer is returned the IRN. The customer is issued with the approved invoice. The invoice will be sent to both the buyer and seller mail IDs that are provided in the invoice.

The aim is of e-invoicing introduction is too avoid VAT fraud such as fake invoicing:

  • Better taxpayer services: one time reporting on B2B invoice data in the form it is generated to reduce reporting in multiple formats
  • Reduction of tax evasion: system level matching of input credit and output tax
  • Efficiency in tax administration: elimination of fake invoices

A short demo

Brochure and PowerPoint of SAP add-on and Indian e-invoicing

Brochure

PowerPoint


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Key Group website


What is an SAP add-on?

An SAP add-on enhances standard SAP itself.

Add-on components are extra functionalities that do not come with the main SAP product. Different organizations have different requirements. SAP has recognized that and facilitated that additional functionality can be added and that such functionality as a component can be integrated with Standard SAP.

An add-on is permitted by SAP – the code 'ABAP' is written and transported where SAP allows it. That means these add-on components sit above the core and access the same dictionary objects or repository objects and perform the required functionality. It contains custom authorization objects according to SAP standards.

SAP add-on solutions are, therefore, without an external interface or external software and can be implemented with minor or no SAP impact in any other area. An SAP add-on does not change the programming code of SAP. As a result, SAP upgrades do not lead to any problems, and maintenance is straightforward. Additional functionality is added to Standard SAP.


Written by Richard Cornelisse
 Richard LinkedIn

Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.

He started his career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently, he is a senior managing director of KEY Group.

Richard has over 20 years’ experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service center migration, and post-merger integration work. Richard is also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact him.