India is one of the fastest growing economies in the world and Tungsten Network has long been committed to accelerating global trade and helping businesses as they work with suppliers in India.
Our “passage to India” began several years ago when we started lobbying the Indian Government for clarification around whether digital signatures were legally permitted to prove the authenticity of invoices.
Always one step ahead of the competition, we worked in partnership with PriceWaterhouseCoopers and TrustWeaver and in March 2017, became the first e-invoicing provider to offer tax compliant e-invoicing in eight states. Dedicated to total compliancy and understanding the intricacies of the Indian market, our team has worked tirelessly to establish our presence in India and adapt to the changing fiscal regulations. We’re already working with a number of multinational companies transacting in India, including a global consumer electronics company with suppliers across the country. With many more set to follow in 2018, it’s a market that’s quickly realising the power of digitisation.
Ambitious tax reform
The launch of the Goods and Services Tax regulations (GST) in July was heralded as the most ambitious tax reform in India in 70 years of independence. Politicians hope that it will dismantle inter-state trade barriers, create a common market and sharpen the competitive edge of the $2.3 trillion Indian economy.
As a value added tax, it’s aimed as a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at a national level. It’s hoped that GST will bring about uniformity of tax rates and structures and will mean there will be no difference in tax rates from state to state, therefore increasing certainty and the ease of doing business. For the final consumer, it should lead to greater transparency of taxes paid and an overall reduction of tax on most commodities.
The launch of GST has received a mixed reception. Despite being on the cards since 2000, some businesses and traders have lacked awareness of the changes. According to the Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal, “more than 60 per cent of traders do not have a computer, which makes compliance a challenge for them.” Others have struggled to keep up with the two monthly tax-filing cycles. There have also been some technical glitches with the GST Network website. In addition, some businesses slowed production ahead of the GST rollout to minimise tax complications and this has led to slowdown in economic growth.
It is inevitable that there would be some teething problems considering the scale of the reform. However, economists predict this is temporary and that GST could boost India’s economic growth rate by up to two percentage points in due course as it eliminates inefficiencies in the tax system. In the long run, there is no doubt that structural tax reform was necessary and will be good for India.
Removing the friction
One key way to remove some of the headache of GST is to move over to automation and e-invoicing. This is relevant for both Indian businesses and those based elsewhere in the world who are keen to trade with Indian suppliers and unsure of what GST means for them.
Adopting e-invoicing and working with a provider such as Tungsten Network will mean that companies can be certain that all the stringent requirements of GST are met. Tungsten Network handles it all and therefore firms can have peace of mind that suppliers are totally compliant and taxes are being paid. A healthy supply chain is vital and non-compliance by suppliers could have unintended consequences for everyone. Suppliers could receive fines or even a jail term for high value fraud cases so it is paramount that businesses trading with India encourage and promote a healthy, tax-compliant supply chain.
Our work in India couldn’t have been carried out without the support of TrustWeaver, a leading vendor of cloud-based trust and compliance services. It provides us with compliant digital signatures on demand, allowing the Indian tax administration to easily verify that invoices are real and unchanged when they audit a taxpayer.
For us, India is a growing market, and the number of transactions has doubled from 23,000 in FY16 to almost 46,000 in FY17 (£42 billion to £85 billion) and the gross value of invoices is on track to increase further in FY18. We are excited about offering a fully established and compliant service to our global network and ensuring that Tungsten customers can trade efficiently, accurately and securely with one of the world’s largest growing economies.