After implementation of the new GST system in India in 2017, which simplified application of indirect tax in the country, the government has now started looking into mechanisms to ensure efficient collection of the indirect taxes and prevent GST fraud.

Analysing e-invoicing models across the world

In April 2019, the Indian GST Council announced the formation of a special Committee on the generation of electronic invoices on the GST portal (CoO). The tasks of the committee include, among others, to analyse and compare e-invoicing models and potential technical infrastructures in various countries in, but not limited to, Latin America, Europe and Asia, in order to find the best fit for the Indian market. Their tasks also include the analysis of the current e-way bill infrastructure and whether or not it can be used for the potential e-invoicing infrastructure.

35th GST Council meeting

After three months’ preparation and consultations, the GST Council held their meeting on 21 June 2019, where two main decisions were made:

  • Scope: all e-invoicing will be made electronic, beginning with B2B transactions.
  • Dates: e-invoicing will become mandatory in stages, beginning on a voluntary basis from 1 January, 2020.

Much remains to be decided, but discussed topics include:

  • Which e-invoicing model to select:

    • hard clearance similar to Mexico or Chile, where the invoice must be approved by the government prior to the distribution to the buyer, or
    • real-time reporting similar to South Korea or Hungary, where the invoice subset must be reported to the government shortly after distribution to the buyer, or
    • identifying another more appropriate model;
  • Which system to use for governmental controls:

    • the centralised GST Portal, or
    • decentralised with accredited third-parties, which seems to be preferred by the GST Network;
  • How to eliminate the lag between invoice generation and verification;
  • How to solve cancellations and corrections of pre-issued e-invoices;
  • The phased roll-out may be based on company size and/or invoice amount;
  • With mandatory e-invoicing, the e-way bill could be scrapped, as the relevant information may be included in the e-invoice;
  • With mandatory e-invoicing, some tax reporting may be simplified or removed completely.

It is worth mentioning that the government is losing a considerable amount of taxes due to input tax credit claimed against fake invoices. According to reports, the government in 2018 paid input tax credit on fake bills worth about USD 600 million.

Pagero Compliance

Pagero is uniquely positioned in the industry as one of the few service providers with an in-house regulatory analysis team working on implementation and maintenance of e-invoicing and other related requirements.

In addition, Pagero co-operates with well-reputed VAT and invoicing compliance experts such as Deloitte, Thomson Reuters and Sovos Trustweaver.

Pagero Compliance services

Learn how Pagero helps companies handle local e-invoicing and other requirements globally.