The government and Reserve Bank of India (RBI) are looking to integrate GSTN (Goods and Services Tax Network) with TReDS (Trade Receivables Discounting System) platforms to enable direct sanctions of MSME invoices.

Integration will ensure that e-invoices raised by MSMEs on GSTN can come directly to the TReDS portal, thus negating the need for any additional activity or documentation, industry players said, adding that it could greatly improve the working of TReDS platforms over a period of time.

It will also lead to faster loan underwriting and sanctions as sourcing directly from the GST platform will provide more assurance and comfort to financiers with respect to the genuineness of invoices. In addition, it will help build an alternative credit database, especially for MSMEs with weak or minimal credit history.

Secondary window

“Vendor data and invoice will flow through the platform, thereby helping us audit in a better way and also form a better data view of the vendor. So it will be very handy as a secondary window as we keep adding data, as we would have GST data as well as the actual performance on the platform. This will also help financiers use this data for other distribution models,” an industry official said.

The GST network is likely to be integrated through the account aggregator model to ensure data privacy and security, sources told businessline.

“Discussions are coming to the conclusion that invoices can come through the GST platform, but through AA (account aggregator) model. GSTN will be registered as FIP (Financial Information Provider) and TReDS platforms as FIU (Financial Information User) and so they will get all the invoices,” a source said.

In February 2021, the Standing Committee on Finance headed by Jayant Sinha had recommended the integration of TReDS platform with GSTN e-invoicing portal to allow real time sharing of data through a single window of access to authenticated invoices.

However, so far, no decision has been taken due to operational, implementation challenges and data sharing concerns, industry players said.

Better integration

“Now there are discussions on integration with all digital public infrastructure including GSTN, Udyam platform for registration and the government e-marketplace (GeM) portal. Either these will happen directly with the TReDS platforms if the government allows it, or then through an account aggregator,” a person in the know said.

Such integrations will also help the government track the invoices being created, and the sanction and rejection rates, thus encouraging more central PSU companies to participate in TReDS.

“CPSEs are not coming in so far but we have been seeing demand from States. This should only improve with the integration of the government portals,” an official said. Goa and Tamil Nadu are already active, and Madhya Pradesh, Uttar Pradesh and Haryana are expected to join TReDS soon.