New Delhi, Aug 22 (KNN) The small B2C firms want to be part of the Goods & Services Tax Network (GSTN) because they buy from large enterprises, said Dr. Viral V. Acharya, Deputy Governor, Reserve Bank of India (RBI).

He was speaking on Public Credit Registry (PCR) and Goods and Services Tax Network (GSTN): Giant Strides to Democratise and Formalise Credit in India.

Dr Acharya said 68 percent of the purchases by small enterprises are from medium or large registered enterprises, giving them a powerful incentive to register, so they could secure input tax credits on these purchases.

The Input Tax Credit motivation is a strong push towards digitisation and formalisation of small businesses, he added.

Moreover, the acceptance of invoices by the buyers creates a trusted repository of invoices. We know they aren’t just cooking their books; they have verified buyers at the other end who vouch for the invoice generated.

This gives one a potentially penetrative view into the otherwise invisible 10 million businesses that are now on GSTN, uploading roughly 1 billion plus invoices every month.

Already, the GSTN has exceeded expectations since its adoption in India. The Economic Survey 2018 estimates that GSTN implementation has increased the indirect taxpayer base by more than 50 per cent, with 3.4 million businesses coming into the tax net. It appears that the number of GST registrants has risen due to a large increase in voluntary registrations, said Dr Acharya.

The RBI Deputy Governor opined that the GSTN, ostensibly, is a way for citizens and businesses to pay their taxes and claim their input tax credit. However, another way to look at the GSTN is as a trusted repository of matched invoices. Sellers upload their invoices to the GSTN; buyers approve the invoices billed to them. Since internal trade amounts to about 60 per cent of GDP, it is a dataset we cannot ignore. (KNN Bureau)