The sales tax contributed around one-third of the total federal tax receipts in 2024-25. More than 26% growth recorded in sales tax revenue in 2024-25 was due to policy as well as enforcement measures. The introduction of digital invoicing (e-invoicing) for businesses in the sales tax system is an important policy intervention aiming to improve compliance for optimizing sales tax collection because of the following benefits:
Digital invoicing enables real-time reporting of taxable supplies, making it impossible for businesses to evade sales tax by underreporting such supplies.
The use of digital signatures, unique invoice numbers and QR codes enhances invoice authenticity and traceability, making it impossible for businesses to inflate input tax on the strength of fake and flying invoices for suppressing sales tax liability.
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