The CBIC has made e-invoicing mandatory for those taxpayers whose turnover is more than INR 50 crores with effect from 1st April 2021.
The term e-invoicing means every transaction needs to be sent to Invoice Registration Portal (IRP) for getting the IRN i.e. Invoice Reference Number which needs to be printed on the face of the invoice to be a GST compliant invoice. This invoice would be termed an e-invoice.
The term EPR means accounting and invoicing softwares such as SAP, Oracle, Ramco, Tally etc.
Now, imagine a situation where the transaction is sent for IRN generation to the IRP and due to any reason or any validation error, the IRN generation Fails and the ERP does not receive IRN for the transaction leading to non-printing of invoice.
In such a situation, the sale transaction entry is already posted in books but the invoice does not get printed due to nonavailability of IRN. This leads to incorrect recognition of sales in the books. In case the quantum of such sale transactions is low, the same can be handled manually by reversing the sale transaction entry, but in case the quantum of such transactions is high, handling them manually would be a biggest challenge for businesses.
Basically, there can be two reasons for the IRN generation failure Scenarios namely Failure due to network issues at the government’s end or at the business’s end and Failure due to Master Data such as Incorrect GSTIN, Incorrect PIN code, Incorrect Tax Rate, Incorrect HSN, etc.
In case of failure due to a network issue, retrigger the same invoice transaction again at regular intervals until the IRN is received. In case the IRN generation is still pending at the end of the day, flag all such transactions as ‘IRN Failed’ in the system automatically at the day end. System to be configured in such a manner that it picks up all such flagged transactions and reverses them automatically through auto job programs before the start of the next day.
In case of failure due to Master Data Reverse billing and Accounting entry followed by correction of Master data. Once corrected, create new billing/accounting & trigger the transaction to IRP with correct master data. In case the IRN generation is still pending at the end of the day, flag all such transactions as ‘IRN Failed’ in the system automatically at the day end. System to be configured in such a manner that it picks up all such flagged transactions and reverses them automatically through auto job programs before the start of the next day.
Imagine a situation where a customer has given an order to buy goods. Goods are ready for despatch and the supplier has also posted the entry in the financials waiting for Invoice printout. Unfortunately, the IRN generation fails for the transaction due to any reason, and the invoice is generated without IRN leading to non-compliance.
The standard ERP flow for generation of Invoices contains four parts.
Firstly, when the order is received from the customer.
Secondly, inventory movement is posted in a system which is also known as Post Goods Issue.
Thirdly, accounting entry is posted in the system and Invoice Number is allocated to the transaction.
Lastly, the invoice is printed.
The Billing and Accounting step is the stage where the system allocates the unique Invoice Number to the transaction along with necessary financial sale postings.
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