Evolving a pan-India electronic invoicing model for the B2B market space

Abstract

With a growing GDP, Indian business community is witnessing many changes and advancements in the way business processes are conducted. With extensive prevalence of IT systems, connectivity and centralized electronic banking the efficiency and turn over period for trade activity has been steadily increasing. However issuance of paper invoice and its subsequent handling, processing and storage of is one of the processes that has not changed much in the Indian context predominantly because of lack of impetus to change and regulatory mechanisms. Electronic invoicing helps to further reduce the inefficiency in the process chain of trade transactions. It involves generating, sending, processing and storing of invoices by electronic means. While there has been significant use of electronic copies of physical invoices, there has not been any progress in large scale adoption of electronic invoices. The objective of this study is to develop a pan India model for a common inter-operable e-invoicing model that could also help reduce the operational difficulties of tax collection for authorities and reduce the cost of compliance of businesses. This study begins with understanding of existing process of invoice flow across various trades. Perspectives were collected from different stakeholders to understand their expectations and concerns. Models of electronic invoicing which have been very successful in countries like Brazil and Mexico were studied. A model suited to the Indian context was proposed, which is to be implemented in a phased manner. An analysis of the existing statutory regulations which are holding up e-invoicing was done and changes to those regulations are suggested.