# Frictionless trade in India: adapting to GST
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-01-30
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Navigating India's GST Regulations with E-Invoicing
Meta Description: Learn how India's Goods and Services Tax regulations are reshaping the economy. Find out how automation and e-invoicing can streamline the tax process.
URL: https://financedigest.com/frictionless-trade-in-india-adapting-to-gsthtml

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_By **Gary Benson**, VP Corporate Development, Tungsten Network_

![Gary Benson, VP Corporate Development, Tungsten Network](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/gary-benson-1736843035644-compressed.jpg)

Gary Benson, VP Corporate Development, Tungsten Network

In July 2017, the Indian government made an ambitious move to transform its economy through the launch of the Goods and Services Tax regulations (GST). GST was heralded as the most ambitious tax reform in India’s 70 years of independence and politicians hope that it will dismantle inter-state trade barriers, create a common market and sharpen the [competitive edge](https://www.financedigest.com/leveraging-ai-for-the-competitive-edge-in-insurance.html "Leveraging AI for the Competitive Edge in Insurance  ") 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 and services at a national level](https://www.financedigest.com/marstons-says-q4-sales-above-pre-pandemic-levels.html "Marston’s says Q4 sales above pre-pandemic levels"). Ultimately, the tax is paid by the end consumer, as the ‘value adder’ can [claim back](https://www.financedigest.com/back-in-barcelona-telecoms-bosses-stake-claim-to-digital-future.html "Back in Barcelona, telecoms bosses stake claim to digital future") the tax on supplier invoices (purchases) and guarantee the same on the sales invoices they issue.It should lead to increased certainty and ease of doing [business plus greater transparency](https://www.financedigest.com/importance-of-transparency-and-connections-in-business.html "Importance of Transparency and Connections in Business") on taxes paid and an overall reduction of tax on most commodities.

**Teething problems**

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. Others have struggled to [keep up with the two monthly](https://www.financedigest.com/dutch-governor-knot-signals-ecb-will-keep-raising-rates-in-months-ahead-ft.html "Dutch governor Knot signals ECB will keep raising rates in months ahead- FT") 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](https://www.financedigest.com/economic-growth-risks-jolt-inflation-obsessed-markets.html "Economic growth risks jolt inflation-obsessed markets").

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](https://www.financedigest.com/automotive-gas-charged-shock-absorbers-market-worth-will-reach-us-2-9-bn-in-2021-grow-at-overall-compound-annual-growth-rate-cagr-of-5-0-between-2021-and-2031.html "Automotive Gas Charged Shock Absorbers Market worth will reach US$ 2.9 Bn in 2021, grow at overall compound annual growth rate (CAGR) of 5.0% between 2021 and 2031") 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](https://www.financedigest.com/french-president-macron-reaffirms-that-pensions-system-reform-is-necessary.html "French President Macron reaffirms that pensions system reform is necessary") and will be good for India.

**Removing friction**

One [key way to remove some of the headache of GST is to move over to automation](https://www.financedigest.com/is-automation-key-to-esg-success-in-the-banking-and-finance-sector.html "Is automation key to ESG success in the banking and finance sector?") 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](https://www.financedigest.com/a-digital-first-world-means-investors-should-look-to-digital-due-diligence-first-too.html "A digital-first world means Investors should look to digital due diligence first too") for them.

Adopting e-invoicing with Tungsten will mean that companies can be certain that all the stringent requirements of GST are met. As a provider of this technology, we handle compliance at every stage of the invoicing process, giving [firms peace of mind that suppliers are totally compliant and taxes](https://www.financedigest.com/german-tax-authorities-should-show-leniency-to-households-firms-amid-energy-crisis-letter.html "German tax authorities should show leniency to households, firms amid energy crisis – letter") are being correctly identified.

When you consider [Forrester research](http://www.tungsten-network.com/press-releases/2017-84-of-businesses-impacted-by-supplier-failure/?id=30922) indicating that 84 per cent of businesses have been impacted by supplier failure, it’s clear that 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](https://www.financedigest.com/encouraging-female-talent-and-entrepreneurship-in-the-supply-chain-industry.html "Encouraging female talent and entrepreneurship in the supply chain industry"). In addition, e-invoicing helps to eliminate invoice fraud, something that is more prevalent when trading across borders.

We’ve been trying to encourage the proliferation of e-invoicing worldwide and in particular, through my work on the EU Multi-Stakeholder Forum – the EU Commission standing committee for the further deployment of e-invoicing across the EU. In recent weeks, we have been [discussing methods of increasing interoperability between e-invoicing providers and governments to improve trade](https://www.financedigest.com/russias-putin-indias-modi-to-discuss-trade-food-supplies-on-friday.html "Russia’s Putin, India’s Modi to discuss trade, food supplies on Friday") across borders. It is [positive that conversations about e-invoicing are occurring at the highest level of governments across the world](https://www.financedigest.com/why-the-it-industry-can-look-positively-towards-the-post-pandemic-world.html "Why the IT industry can look positively towards the post-pandemic world").

**Bright futures**

For us, our “passage to India” began several years ago when we started lobbying the Indian Government for clarification [around whether digital](https://www.financedigest.com/the-soft-skeletal-implants-market-revolve-around-digitally-driven-innovation.html "The Soft Skeletal Implants Market revolve around digitally driven innovation") signatures were legally permitted to prove the authenticity of invoices. We worked in partnership with PriceWaterhouseCoopers and TrustWeaver to [become the first e-invoicing provider](https://www.financedigest.com/are-banks-destined-to-merely-become-infrastructure-providers-in-the-banking-industry-of-the-future.html "Are banks destined to merely become infrastructure providers in the banking industry of the future?") to offer (pre GST) tax compliant e-invoicing in eight states. We are passionate about understanding the intricacies of the Indian market, establishing [digital compliant invoicing in India and adapting to the changing](https://www.financedigest.com/digital-marketing-for-finance-and-insurance-firms-is-changing-are-you-ready.html "Digital marketing for finance and insurance firms is changing — Are you ready?") fiscal regulations.

The number of transactions across Tungsten Network from businesses trading with India has doubled from £42 billion to £85 billion in 2017 and we are 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](https://www.financedigest.com/gas-price-surge-just-one-more-headwind-for-world-economy.html "Gas price surge, just one more headwind for world economy").


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