Keeping up with compliance | India mandate update

*This article was updated on 14 March 2020.

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The Backstory

Government mandating for concepts like e-invoicing provide a multitude of benefits to the country and its economy – from the improved collection rates on taxation to tackling transcription and systematic errors common to manual process – the changes bring the global economy ever closer to a more agile, digital economy.

The issue of compliance within the India GST (Goods & Services Tax) were well-documented. Government officials there speculated that the need to improve the efficiency of their collection rates was long overdue;

“The IMF (International Monetary Fund) team has estimated that the compliance gap may be of the order of 40%,” a government official told the Times Of India, in a recent article.

The new e-invoicing system steps beyond being tax-focussed – doing business in the country will fundamentally change as a result. Its central motivations are as follows:

• Tax evasion offences will be tackled via monitoring any and all B2B invoices and the associated tax of these transactions.
• Standardized reporting between taxpayers and the authorities will change, both in how and what businesses provide.

The transition ends in October 2020 with obligatory usage of the GST invoice portal – after several months of voluntary participation as a means of familiarising businesses with the change – and it’s the result of over a year of deliberation over how the mandate should function.

This can be considered a sign of things to come – not just in the region, but on a global scale.

What you need to know

From October 2020 (Updated 14 March 2020), all businesses with a turnover of at least Rs.100 Crore will be obliged to start using the IRP.  As such, you will need to report your invoice details to the Invoice Registration Portal (IRP), initially on a voluntary basis, before scaling up to an obligatory regulation.

The IRP will return your invoice data, digitally signed and accompanied by a signed Quick Response (QR) code, and most importantly, an invoice reference number. Only then can you invoice your customer through your preferred invoice submission method.

As taxpayers, several methods will be available to connect to the IRP including via the web, APIs, mobile applications and SMS, offline tools or GSP-based.

The IRP holds the e-invoices for 24 hours during the validation process. However, archiving of all e-invoices submitted to the GST will occur, lasting the whole financial year. Due to this, retaining the IRNs (invoice reference number) for each invoice will be necessary.

On the brighter side, the new system will simplify the preparation of Goods and Services Tax (GST) returns by auto-populating the returns with the data from the e-invoices. The GST System will be able to update both the Sales and purchase registers for buyers and suppliers.

Your To-Do list

In the short-term, voluntary participation is already available and encouraged. However, the main business aim is to minimize disruption – something compliance procedure doesn’t prioritize in the same degree.

The good news is that help is at hand.

We operate the world’s largest, compliant business transaction network and are supporting global businesses during this important transition – keeping complex implementation and disruption out of your internal system. As mentioned, this isn’t the first e-invoicing mandate, nor will it be the last. Securing a strong partner to navigate the shifting landscape is essential to a world-class standard of operation.

You can head over to our dedicated microsite for a breakdown of the mandate, useful resources, and information on how we can support you through this important change.