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Real-time payment data in GSTN, a must India's GST 2.0 reforms aim to simplify the tax system with dual rates of 5 per cent and 18 per cent plus a 40 per cent luxury slab, with a view to lowering taxes on essentials, raising consumption, improving ease of doing business, and rationalising duty structure to reduce cases under inverted duty structure and faster duty refunds. While the new rates pose some revenue deficit risk, this can be offset by effectively addressing the large GST evasion, as highlighted by the massive Rs.2.23 lakh crore in detected evasion in the last five years. Improved tax enforcement can be achieved through targeted digital interventions, such as integrating B2B payment records to enable real-time revenue monitoring, create transaction trails, and curb fraudulent tax credits. Despite progress in digital GST infrastructure, enforcement remains largely manual and retrospective. Post-facto audits cover only a fraction of the millions of daily B2B transactions, leaving significant room for evasion and high audit costs. The absence of real-time transaction-level automation and invoice-payment synchronisation limits the system's ability to optimise revenue and ensure compliance. A shift to authenticated, real-time digital trails that seamlessly reconcile data from ERPs, other bookkeeping tools, GST, and banks is imperative. Such a system will strengthen tax compliance, induce payment discipline and foster a transparent, efficient, and business-friendly ecosystem. Plugging the gaps Rule 37 of the CGST mandates reversal of Input Tax Credit (ITC) with interest if suppliers are not paid within 180 days of invoice issuance. However, without access to granular invoice and payment data, verifying compliance is administratively infeasible. Since invoice-level data is already uploaded to GSTN, a practical solution lies in integrating two additional fields: (1) Payment Due Date and (2) Actual Payment Date. This will allow automated ITC reversal protocols and statutory alerts for overdue payments. Beyond compliance, this framework would reinforce payment discipline across the B2B ecosystem. Over time, ITC eligibility can be directly linked to payment timelines, incentivising timely settlements and reducing liquidity stress among suppliers. Crucially, a B2B payment digital framework can also enhance the effectiveness of Section 43B(h) of the Income Tax Act by enabling automatic disallowance of expense deductions on delayed payments to micro and small enterprises (MSEs)--a provision currently prone to evasion and year-end manipulations. This comprehensive digital framework can create a unified audit trail across sales, purchases, and payments for real-time fraud detection. Such structured monitoring strengthens audit capabilities, deters fraud, and can be further refined using insights from historical GST evasion patterns. Beyond Rule 37 violations and fake invoicing, firms evade GST through tactics such as undervaluing supplies, misclassifying goods, suppressing sales, deliberately not registering despite exceeding turnover thresholds, inflating returns, overclaiming ITC, and using shell entities. Transaction trail Integrating B2B payment data into the GSTN creates an independent transaction trail that can help detect various forms of tax evasion, including under-reporting of sales, discrepancies between declared invoice values and actual payment amounts, circular trading schemes and fictitious supplier networks. Integrating payment records into GSTN can also reshape India's B2B trade credit landscape. By auto-flagging late payments and reporting them to banks, credit bureaus, regulators, and stock exchanges, the system would introduce reputational consequences that incentivise timely payments. This would promote formalisation, accelerate business cycles, expand the tax base, and enhance revenue. Structural rate reforms, while necessary, are insufficient to resolve deeper compliance challenges. Embedding B2B payment data into the GSTN can digitise Rule 37 enforcement, ensuring timely supplier payments which may also help MSME cash flows. It also enables automatic implementation of Section 43B(h) of the Income Tax Act, curbing delayed payments to micro and small enterprises. By integrating payment intelligence with tax administration, and linking defaults to financial systems, a GSTN-based credit discipline framework can foster a more transparent, accountable, and MSME-supportive business environment. www.thehindubusinessline.com, dt. 13-09-2025

Real-time payment data in GSTN, a must

India's GST 2.0 reforms aim to simplify the tax system with dual rates of 5 per cent and 18 per cent plus a 40 per cent luxury slab, with a view to lowering taxes on essentials, raising consumption, improving ease of doing business, and rationalising duty structure to reduce cases under inverted duty structure and faster duty refunds.

While the new rates pose some revenue deficit risk, this can be offset by effectively addressing the large GST evasion, as highlighted by the massive Rs.2.23 lakh crore in detected evasion in the last five years. Improved tax enforcement can be achieved through targeted digital interventions, such as integrating B2B payment records to enable real-time revenue monitoring, create transaction trails, and curb fraudulent tax credits.

Despite progress in digital GST infrastructure, enforcement remains largely manual and retrospective. Post-facto audits cover only a fraction of the millions of daily B2B transactions, leaving significant room for evasion and high audit costs. The absence of real-time transaction-level automation and invoice-payment synchronisation limits the system's ability to optimise revenue and ensure compliance.

A shift to authenticated, real-time digital trails that seamlessly reconcile data from ERPs, other bookkeeping tools, GST, and banks is imperative. Such a system will strengthen tax compliance, induce payment discipline and foster a transparent, efficient, and business-friendly ecosystem.

Plugging the gaps

Rule 37 of the CGST mandates reversal of Input Tax Credit (ITC) with interest if suppliers are not paid within 180 days of invoice issuance. However, without access to granular invoice and payment data, verifying compliance is administratively infeasible. Since invoice-level data is already uploaded to GSTN, a practical solution lies in integrating two additional fields: (1) Payment Due Date and (2) Actual Payment Date. This will allow automated ITC reversal protocols and statutory alerts for overdue payments.

Beyond compliance, this framework would reinforce payment discipline across the B2B ecosystem. Over time, ITC eligibility can be directly linked to payment timelines, incentivising timely settlements and reducing liquidity stress among suppliers.

Crucially, a B2B payment digital framework can also enhance the effectiveness of Section 43B(h) of the Income Tax Act by enabling automatic disallowance of expense deductions on delayed payments to micro and small enterprises (MSEs)--a provision currently prone to evasion and year-end manipulations.

This comprehensive digital framework can create a unified audit trail across sales, purchases, and payments for real-time fraud detection. Such structured monitoring strengthens audit capabilities, deters fraud, and can be further refined using insights from historical GST evasion patterns.

Beyond Rule 37 violations and fake invoicing, firms evade GST through tactics such as undervaluing supplies, misclassifying goods, suppressing sales, deliberately not registering despite exceeding turnover thresholds, inflating returns, overclaiming ITC, and using shell entities.

Transaction trail

Integrating B2B payment data into the GSTN creates an independent transaction trail that can help detect various forms of tax evasion, including under-reporting of sales, discrepancies between declared invoice values and actual payment amounts, circular trading schemes and fictitious supplier networks.

Integrating payment records into GSTN can also reshape India's B2B trade credit landscape. By auto-flagging late payments and reporting them to banks, credit bureaus, regulators, and stock exchanges, the system would introduce reputational consequences that incentivise timely payments. This would promote formalisation, accelerate business cycles, expand the tax base, and enhance revenue.

Structural rate reforms, while necessary, are insufficient to resolve deeper compliance challenges. Embedding B2B payment data into the GSTN can digitise Rule 37 enforcement, ensuring timely supplier payments which may also help MSME cash flows. It also enables automatic implementation of Section 43B(h) of the Income Tax Act, curbing delayed payments to micro and small enterprises.

By integrating payment intelligence with tax administration, and linking defaults to financial systems, a GSTN-based credit discipline framework can foster a more transparent, accountable, and MSME-supportive business environment.

www.thehindubusinessline.com, dt. 13-09-2025