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    What Role Does An API Play In Invoicing?


    Large scale promotion of GST invoicing across the globe is underway to expedite the tax filing process. With sizable API adoption, it’s hoped that filing and e-invoicing will become more convenient for all parties involved in trade and business.

    Before diving into how this digital solution is already fulfilling the ideals of greater automation and better resource allocation, let’s define API and its relevant use cases.

    What Is API And Who Uses It?

    API is short for an application programming interface. It acts as a secure way to enable interaction between two different applications. When it comes to e-invoicing, the software allows taxpayers to communicate, exchange, and process data between invoice systems and administrative authorities.

    The programming interface specifications make it mandatory to process GST services via two separate software components interacting with one another. Therefore, the government must authorize a platform that allows taxpayers to access the GST services through two different accounting solutions.

    Thanks to the integration of various web services, this e-invoicing system delivers multiple functionalities that add value for users. These include filing tax returns, making payments online, viewing ledgers, handling registrations, and more. 

    The accounting programming interface can be used by both taxpayers and GST providers to ensure compliance with government policies. Generally, businesses that earn over a specified sum are required to file taxes via an application programming interface.

    Why Use Application Programming Interfaces Under GST?

    It’s challenging to implement GST policies without guaranteeing taxpayers a convenient filing method. Accordingly, this is why we use APIs. It connects third-party apps with other systems to improve interoperability for a variety of devices.

    These apps then gain access to the GST filing system through the software intermediary. Each user’s respective ERP solution can help generate e-invoices while the same information is registered in the invoice registration portal (IRP) for security purposes. The IRP then processes e-bills through an easy-to-use application interface.

    Application Programming Interface Types

    API systems for invoicing fall into seven major categories. These include:

    • Authentication 
    • Creating an invoice reference number 
    • Generating e-way bills
    • Canceling e-way bills
    • Retrieving e-invoices details
    • Deleting the invoice reference number
    • Procuring GSTIN details

    How An API Helps Generate E-invoices

    In terms of what APIs are used for, it eventually boils down to increased connectivity and automation. For invoicing, this means improving the process of e-invoice generation. Taxpayers can simply feed details of their invoices into their accounting software. The application programming interface then retrieves this data and delivers it to the invoice registration portal. The IRP registers these bills and proceeds to generate a reference number.

    Once the invoice number is generated, the document is digitally signed and delivered back to the taxpayer with a QR code. The accounting system can then print the bill with the reference number and the code.

    What’s Required Before Using APIs For An E-Invoice

    Here’s a list of prerequisites to check off before you use the application programming interface.

    • GST providers and taxpayers must first automate their invoicing systems 
    • Taxpayers and GST providers must also ensure virus and malware-free traffic from their ends before the invoice registration portal receives it
    • The authorities reserve the right to suspend service in case of detecting bots, intrusions, malware, or any other malicious traffic
    • Someone who pays taxes must adhere to the IT regulatory standards as specified by the government
    • Security and infrastructure must also be in strict compliance with specified policies
    • To correctly interact with the production environment, taxpayers are required to list at least four Static IP addresses
    • A testing system must be in place before accessing the production environment for using different types of services
    • The post-API-integrated systems and the corresponding e-invoice generation activities must be tested 

    Third Party Applications: How To Integrate Complementary Solutions

    In the case of a third-party platform, there’ll be a three-tiered interaction between the application service provider (ASP), the IRP, and the accounting software. With these apps, the ASP is responsible for retrieving data from the taxpayer’s billing software. It must also reset this information in compliance with the IRP approved format. Once the data is converted into the required format, it’s sent to the service provider via the application interface.

    Processing e-invoices via third party solutions is an attractive option since the method is comparatively cost-effective. Apps set up with a built-in ERP system to communicate with the IRP via an API are generally expensive, especially when there isn’t another party involved.

    The Bottom Line

    Having learned the meaning of API and its function, you’re that much closer to ensuring a convenient method of generating e-invoices.

    Government authorities have taken several steps to make intermediary implementation convenient for taxpayers and GST providers.

    This is especially handy when you’re a taxpayer running a medium-sized business. Using the API software, you can ultimately expedite invoicing and ensure early filings with minimal effort.