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Come January, e-invoicing to help curb fraudulent GST credit claims


In July 2017, the establishment of the Goods and Services Tax (GST) not only ushered in the era of One Nation, One Tax, it transformed the indirect tax regime in India. And while its initial two years have seen a fair share of complications in understanding GST laws, technology driven solutions have played a crucial role in making the filing of GST returns less cumbersome. 

Though the introduction of automated GST filing has helped curb the problem of tax evasion to a certain degree, over ₹11,000 crore worth of input tax credit has been reported via fraudulent invoices in FY18-19 alone. With a view to curb tax evasion and to set a solid foundation for digital transformation, the Goods and Services Tax Network (GSTN) will be introducing e-invoicing starting January 2020. The measure falls in line with global practices adopted by many countries across the world. By introducing the proposed e-invoicing system, the government plans to standardize invoicing formats for all industries. This will allow the automation of reading and processing different invoices across various accounting software. 

How will e-invoicing work?
Suppliers will be able to generate a unique identification number or Invoice Reference Number for each of their invoices. Once an Invoice Reference Number is generated, details of the invoice and the IRN will be provided on a real-time basis to agencies like the NIC. These agencies will be able to validate the IRN and provide a digitally signed invoice to suppliers. Because the invoice will be validated by an authorized agency, it can also be sent to the GSTN for auto populating returns or e-way bills. (Part A). Moving forward, only invoices with a system generated invoice reference number are expected to be considered valid. 

When can you expect the e-invoicing system to be introduced? 
For starters, the e-invoicing system is expected to be implemented in phases and might be applicable to invoices under a certain threshold. This system could eventually expand its net to all B2B transactions and even be extended to B2C in the near future. 

Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application Avalara TrustFile GST can help you with GST compliance automation, contact us through https://www.avalara.com/in/products/gst-returns-filing


Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. Currently, she owns a small business in Mumbai. She acquired a Master's Degree in Business Administration from Symbiosis International University in 2014. She is a baker, blogger and avid reader.