Renowned for its diversity, India is taking the same approach to its e-invoicing framework. There have been several changes and new possibilities included in the required processes and technical (“JSON”) invoice schema since e-invoicing was introduced. Such changes are unsurprising as many of the existing Continuous Transaction Controls (CTC) systems regularly bring new elements to their digital tax controls, often extending their scope into new areas. Even in the most mature of CTC systems, like in Chile, Mexico and Turkey, such changes are frequent and are inevitably keeping taxpayers on their toes. The concept of CTC is still relatively new. Since their original introduction some 10-15 years ago, tax authorities have become wise to the benefits they can bring and as a result we see new CTC regimes being introduced and existing ones constantly tweaked to further optimize tax controls.
The new Indian e-invoicing requirements haven’t even entered into force yet, but they have changed many times since they were first published. It would be a mistake to view these changes prior to the mandate deadline as a certain sign that this deadline will, once again, be extended; indeed, change is just about the only thing that’s constant in all CTC regimes, prior to and after entry into force of regulatory mandates.
Legally, there has been only one regulatory change which had two major components. The first part deferred the mandatory CTC requirements to October 2020. On March 21, the Notification No.13/2020 not only delayed the go-live date of the mandate but also exempted certain business categories from its scope. Therefore, the second part of the change concerns which business categories are now exempt – insurers, banking companies and financial institutions, including non-banking financial companies; goods transport agencies supplying services in relation to transportation of goods by road in a goods carriage; passenger transportation service suppliers; registered persons supplying services by way of admission to exhibition of cinematograph films in multiplex screens.
From a technical perspective, the past few months have seen two rounds of technical invoice schema changes; the current JSON schema version being 1.02. While the second schema change wasn’t material, the first version change definitely was: The JSON was extended to optionally include e-waybill related fields. This means it’s now possible to issue an e-waybill at the same time as issuing an e-invoice, all thanks to back-end connectivity between the e-invoicing and e-waybill platforms. As a result, all relevant invoice and e-waybill information will be transferred from the e-invoicing portal to both the e-waybill portal plus the GST portal in real-time. This back-end connectivity wasn’t a complete surprise as it had already been announced that the GSTN will auto-populate the ANX-1 part of the GST returns for the seller and the ANX-2 for the buyer using e-invoice data received through the IRP. The authorities had however previously indicated that pre-population of the e-waybill was a longer-term ambition. After the recent schema changes, it’s clear the e-invoicing platform will be at the core of data collection for the Indian government by being the main source of data provided to the e-waybill and GST return platforms. Over time, it’s not unlikely that users will worry about separate e-waybill system access or GST filing anymore, as these tax-related obligations will be automatically met via the e-invoicing system.
Whilst many companies are wondering if a further delay to the go-live date of October is likely, most that fall within scope of the e-invoicing mandate have started their implementation processes. Another deferral might happen, but there is no way to be sure, and postponing implementation now would be a very risk decision for businesses to take. Given the repeated commitments the sitting government has made to this reform, as well as the benefits the relevant authorities would see from a live CTC system, the risks of non-compliance are substantial and as the current deadline approaches, the stakes become higher. The next GST Council meeting on 14 June should provide welcome clarity for businesses in scope.
Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.