The new Indian e-invoicing system has been live since October 2020 and it has been rolled-out in phases. The first phase started in October 2020 with taxpayers with a 500 Cr. rupees threshold or more and the second phase continued in January 2021 covering taxpayers with a threshold of 100 Cr. rupees or more.
The Indian authorities have continuously expressed their ambition of a nationwide e-invoicing solution and plans to gradually expand the scope of e-invoicing. It is therefore interesting to note that taxpayers were not allowed to implement e-invoicing voluntarily in the first two stages but instead had to wait until their market segments were identified by the authorities as ready for testing.
It was previously announced by the Finance Secretary that by 1 April 2021 all taxpayers in India would have access to e-invoicing, but it was not clear from these announcements whether the goal was to make it mandatory or simply to allow voluntary adoption of e-invoicing from April 2021.
Recent e-Invoicing Developments
The e-Invoice API Sandbox portal has been enabled for taxpayers with a turnover between 50 Cr. rupees and 100 Cr. rupees for technical testing. Given the previous practices, this development could be interpreted as an indication that a mandate is around the corner.
It was previously announced through the e-Invoice API sandbox portal that taxpayers between 100 Cr. rupees and 500 Cr. rupees were enabled for testing. This development was soon followed by a notification mandating e-invoicing for those taxpayers from January 2021. Therefore, it is expected that the Indian government will soon publish a notification that mandates e-invoicing for taxpayers with a turnover of 50 Cr. rupees or more.
Even though there are no formal statements communicated by the authorities on the timeline or on the mandate, many stakeholders are expecting 1 April 2021 to be the mandatory date to comply with the new e-invoicing process for the next segment of taxpayers. Given the previous announcements, it would not be a bombshell. However, taxpayers would be left with a very tight deadline to comply.
Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.