E-invoices, readable across different software, eliminate the need for re-entering data and promote tax compliance. They automatically update transaction data in other tax documents like e-way bills and GST returns, enhancing economic activity oversight. The initial plan to deny transportation permits to firms not issuing e-invoices for business-to-business transactions aimed to boost tax compliance. The heightened reporting demands under the GST regime contribute to the economy’s formalization and tax compliance. This rise in indirect tax compliance has also driven an increase in direct tax collections, making the under-reporting of sales more difficult.

Source: Mint January 11, 2024 19:15 UTC