Following a Public Consultation in August 2019, the Indian GST Council released a document in the last couple of weeks that provides more detail about the planned implementation of an Invoice Registration Portal (IRP) as soon as January 2020. Please note that while the implementation is only weeks away, there are still gaps and the system itself is still under construction. The Indian government is taking a wise decision by offering the platform for voluntary usage, to begin with, so that it can be tested and improved over time.
But, under the pressure of weakening tax revenues and widespread invoice fraud, the Indian Government is likely seeking to eradicate tax malpractice and improve the interoperability between systems to facilitate smoother and faster tax reporting by prepopulating tax filing reports for tax payers.
As said, the use of the platform will be voluntary to begin with, which means that Tungsten customers are not immediately affected. However, we are expecting that at some point, it will become mandatory in phases.
How will it work? (high-level summary)
The Invoice Registration Portal (IRP) will be an ‘invoice registration’ system; it is not a system where invoices are created; suppliers can continue to use their systems for invoice creation and they can continue to send invoices to their customers as they do today.
Voluntarily, suppliers can register their invoices to the IRP. They can do this manually in a portal, or via integrated channels such as direct APIs or using Service Providers. The IRP system will expect that mandatory fields are populated and that the invoice data is submitted in a standard JSON format. There will be optional fields available to serve business needs. The initiative will cover invoices, supplier credit notes, buyer debit notes, but outbound export invoices will also be in scope. The invoice schema is available on HTTPS://www.gstn.org/e-invoice/
Upon receipt of the data, the IRP system will validate if all mandatory fields have been populated and the invoice is not a duplicate. It will then assign a unique Invoice Reference Number (IRN) and digitally sign the invoice. The IRP system will also create a Quick Response Code (QR). The IRP system will also update the Invoice Register in the GST system, which then updates the tax filing forms. Information is also shared with the e-way bill system.
The signed invoice and QR will be sent as a JSON payload to the supplier via email. The buyer will also receive the invoice per email, or they can access it via the portal.
We know from experience in other countries that what works for government does not always satisfy business needs. Early feedback on the currently available documentation is that high-volume buyers and suppliers are concerned about having to rely on email or a portal to have access to invoices. There are also doubts if the business level information in the invoices will be sufficient to support efficient P2P processes.
What does this mean for you?
As said, the use of the platform is voluntary to begin with, which means that Tungsten customers are not affected in the short term. However, we are expecting that at some point in the future it may become mandatory in phases and we will keep you updated as things develop.
Get in touch
If you’d like to discuss your compliance needs for India, contact [email protected] and we’ll arrange a call back to understand the size and scope of your processes in this territory. This will help us assess the development effort needed ‘if and when’ the Indian Government moves to mandate and help us evaluate whether and how we work to be part of the portal registration process.