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Artificial Intelligence Role in Electronic Invoice Under Goods and Services Tax

Conference Paper · June 2023

DOI: 10.1109/CICTN57981.2023.10140870

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 Artificial Intelligence Role in Electronic Invoice
Under Goods and Services Tax
Rakesh Kumar Rupa Khannna Malholtra Rajesh Singh
Uttaranchal institute of Management Deprtment of commerce Division of Research & Innvovation,
Uttaranchal University Graphic era Deemed to be University Uttaranchal University,
Dehradun, India. Dehrdun, India Dehradun, India
aigrakeshkumar@gmail.com rupakhanna@gmail.com drrajeshsingh004@gmail.com

Rajat Balyan
Samta Kathuria Pradeepto Pal
Uttaranchal Institute of Technology,
LCD, Division of Research & School of Agriculture
Innvovation, Uttaranchal University Uttaranchal University
Uttaranchal University, Dehradun, India Dehradun, India
Dehradun, India balyanrajat1812@gmail.com pradeeptopal03@gmail.com
samtakathuria14@gmail.com

Abstract—Deep learning, machine learning, and artificial
intelligence are now widely used ideas. This. Legal and ethical
considerations should also be considered while developing and
deploying artificial intelligence technologies. New statistical and
analytical tools that offer speed and simplicity are now available
to tax professionals. AI can help with fraud identification, which
will help with governmental oversight and control. This article
focuses on a few GST features enabled by AI and offers
recommendations for enhancing the current tools. The
implementation of the good and service tax is the foundation of
artificial competition. It lessens tax avoidance and increases
transparency among entrepreneurs, common people, and
customers. The pre-GST era saw a wide variety of taxation
methods, the majority of which relied on physical labor. This
study focused on the artificial aspects of electronic participation
that facilitate straightforward procedures. Electronic Invoice is
an important part which curd tax evasion. The study
emphasized E- Invoice and highlighted future
recommendations.
Keywords— Artificial Intelligence, GST, Taxation, Assessment
I. INTRODUCTION
Our understanding of the factors of production has undergone
a significant shift because of the development in the
employment of robots and artificial intelligence. Although
land, labor, and capital are identified as the three main
sources of wealth production in classical economic theory,
there has been a shift in the emphasis placed on which of
these is most important [1]. They must disclose product and
service sales and purchases, as well as taxes received and
paid. Multiple forms may be used to complete a tax return
depending on the taxpayer's registration. To achieve the main
objective, the GST Network was founded as a Section 25 (not
for profit) non-government private business. For
Northeastern States and Special Category States, the
threshold for theft under state VAT is lower at Rs. 5 lakhs.
Businesses with a revenue of more than Rs. 10 lakhs will need
to register under the proposed GST [2]. The danger of loss of
control brought on by flaws in artificial intelligence design,
as well as the absence of design flaws, are the two main
causes of loss of artificial intelligence risk. It can be
challenging legally to determine who is accountable if the
risk of uncontrolled artificial intelligence materializes.
Robots can also think and create independently like humans
due thanks to artificial intelligence [3]. The problem of tax
evasion is one that involves a lot of actors and data flow.
Experts can participate in the evaluation of tax evasion
events, but automation of the diagnostic processes is
necessary. The development of cognitive models can be
ensured by using a deep neural network (DNN) [4].
Discussing the two subjects takes thorough understanding of
each because tax is a complex issue and AI is a highly
technical one. AI is enabling some normal, repetitive, and
menial tasks. These include spell checking, speech
recognition, and ATM check amount recognition [5]. The
design of the tax system becomes more complex because of
the new individual income tax law's lower comprehensive tax
rate. If tax management and collection fall behind, tax
loopholes could arise, which would not only be detrimental
to fairness and the protection of income. The use of artificial
intelligence technologies in tax risk analysis can be very
helpful in identifying unusual corporate practices [6]. Tax
planning refers to taxpayers through its previously planned
tax-related issues, with the main objectives being legitimacy,
tax relief, and deferred income tax. Big data can be used in
tax planning to comprehend data and learn about its potential
value. On this foundation, tax planning is used to advance the
development [7]. For better decision-making, the
management of accounting systems and procedures should
investigate a cost-effective approach using readily available
resources. Electronic commerce is viewed as a feasible option
for reducing costs and raising productivity in the twenty-first
century. Recently, accounting systems have adopted artificial
intelligence techniques such as machine learning and
machine learning [8].
II. THEOROTICAL BACKGROUND

XXX-X-XXXX-XXXX-X/XX/$XX.00 ©20XX IEEE

 The switch to electronic systems for tax declaration and
payment presents an opportunity to employ data-driven fraud
detection strategies. The landscape of tax and financial fraud
identification approaches has also been significantly altered
by recent developments in machine learning and artificial
intelligence applications. In emerging nations, where tax
evasion is more widespread and institutions are weaker, these
are becoming more important [9]. Artificial intelligence does
not possess legal subject status and is not liable for mistakes it
makes. It is believed that causes other than design flaws are to
blame for artificial intelligence's out-of-control behavior. It is
also crucial to enhance and perfect the supervisory system to
apply artificial intelligence more effectively to the taxation
system. Most nations define tax policy as a set of measures
and actions pertaining to the utilization of tax income as a
weapon to aid and boost economic growth. One of the key
fiscal tools the government uses to promote or restrain
economic growth and the development of certain industries is
tax policy. For developing nations (DMCs), value added tax
(VAT) is a practical strategy to boost indirect sales tax
collection. Although the application of VAT is challenging,
the ASEAN region's VAT collection has been remarkably
sensitive to economic development. Governments must keep
an eye on the pricing that big corporations set to stop them
from exploiting them to raise prices arbitrarily [10].
TABLE I. MAIN LITERATURE REVIEWED IN RELATION TO THE AIM OF
THE RESEARCH TOPIC
Technology Year of
Finding and Reference
Publication
The first research on using machine
learning to the creation of revenue-
optimal auctions. In further research,
neural networks have been used to create
the best auctions for single-bidder and
budget-constrained contexts. Numerous
studies of Stackelberg equilibria in
various sequential situations, particularly
ML 2020
security games, have also been conducted.
These environments' economic policies
are created in a way that encourages an
agent to act honestly. This eliminates the
requirement for two-level learning, in
which agent actions are learnt
concurrently with an economic policy
[11].
For all parties involved, blockchain
technology can guarantee data
confidentiality, accuracy, and
transparency. Its traits, including
autonomy, equality, and transparency,
could spot fraud and corruption.
Traceability and immutability are the
most crucial characteristics for enabling
BclockChain 2017 competitive performance. Blockchain
technology has showed promise for use in
Saudi Arabia's VAT system. However,
several factors must be taken into account
for this technology to be successfully
adopted. When using electronic
technology to create VAT systems, at
least four options can be considered and
implemented [12].
The AI Economist employs two-level,
deep RL to discover the best course of
AI 2017 action. In many situations, such as the
design of indirect mechanisms, the
principal-agent dilemma, or regulating
Technology Year of
Finding and Reference
Publication
systems including misaligned or immoral
individuals, two-level RL is natural. Since
agents must constantly adjust to shifting
incentives, it presents a very unstable
learning challenge [13].
One strategy that avoids the definitional
problems around "what is a robot?" is to
tax AI in the form of a barista. It appears
difficult to provide an exhaustive list of
taxable AI, robotics, and automation
technology. The desired type of robot
would determine the proper level of
taxation for that jurisdiction. It would be
ideal to impose a fee on autonomous cars
AI 2022 utilizing a national road network at the
international level. The "rifle shot"
method of taxing robots and artificial
intelligence (AI) focuses on certain acts
that can be legally levied at the municipal,
state, or federal levels. In the face of
widespread job displacement across
industries and countries, saving a few
barista jobs in a certain metropolis would
be a drop in the ocean [14].
According to one economist,
developments in artificial intelligence
(AI) ought to make it increasingly
challenging for governments to continue
AI 2020 levying high taxes on labour. Instead,
governments should concentrate on
taxing monopolies, externalities, and
fixed factors, particularly in the case of
monopolies [15].
III. RESEARCH METHODOLOGY
Pre- and post-processing, or supporting computations, are
necessary for ML to be of any value. A model is frequently
just one element of many models that work together to
achieve a result. The true behavior of an AI application
begins to emerge at this level of abstraction. A systematic
review looks for every empirical piece of information that
responds to a certain research topic or hypothesis. By using
structured, open methods, bias may be minimized when
evaluating papers. According to the Preferred Reporting
Items for Systematic Review and Meta-Analysis, this study's
methodology was employed (PRISMA). Study base on
secondary research which taken from databased like google
scholar, Scopus and web of science. Study finds out existing
used of artificial intelligence and future scope in rest to
electronic invoice used in present time. Over 402 research
papers have been completed at this point. Before the GST
period, some studies with minimal data were published. Also
included are several durable items that will be useful in the
future. Under the Goods and Services Tax, all papers
pertaining to digitalization include references to artificial
intelligence, blockchain technology, big data, and robotics.
Studies on digitally connected goods and services are few and
far between. However, several studies on the effects of the
GST on the economy have been published. But the futures
perspective depended on digitalization. It decreased tax
evasion and increased interpersonal transparency. PRISMA
is a minimal set of elements for reporting in systematic
reviews and meta-analyses that is supported by evidence. It is
primarily concerned with reporting reviews that assess the
outcomes of treatments, but it may also serve as a foundation
for reporting systematic reviews with goals other than
assessing interventions. The author initially searched 1669
papers. First screening, 355 and subsequently in second
screening 137 paper revived. 111 papers eliminated due to
An invoice is required to be generated in
topic not matched. Finally, 17 papers were revived. All billing software by the taxpayer.
papers related to artificial intelligence used in goods and
services tax. Aper selected these aper from Scopus database
and google scholar.

A. Flow Diagram of Methodolgy

The JSON file is then needed to be created
for the same. This file is to be uploaded on
Table II displays information on search links in the Scopus the IRP- Invoice Registration Portal.
and Google Scholar databases. Role of artificial intelligence
in Scopus and Google Scholar searches for Goods and
Service Tax. 17 papers were screened and chosen for
literature.

TABLE II. SEARCH LINK

Generation of IRN (Invoice Reference
Number)
Database
Searching link
Title- Abstract- Keyword (Artificial OR
Scopus Intelligence OR Goods OR services tax OR
GSTR OR E-invoice)
Google
Artificial intelligence, Goods, and service tax.
Scholar If the supplier has not generated IRN then
IRP will create it. The supplier can get it
done by using HASH Algo.

IV. REALTION BETWEEN AI AND E- INVOICE UNDER GST

Fig. 1. Procedure of E- Invoice.

Due to the manual mechanism used for indirect taxation

during the pre-GST period, there were several taxes imposed.
Both tax evasion and tax burden on consumers were V. HOW AI IS BENEFIT IN E- INVOICE UNDER GST
significant. Consumers paid more tax, but it wasn't deposited
with the government. The relationship between business and
A significant hole in data reconciliation for the Goods and
government was lax in this system. For the authentication
Services Tax is closed and filled by e-invoice (GST).
procedure from the consumer to the government, arithmetic
Interoperability and a decrease in data input mistakes are
is employed. It is a connected system where consumers are
made possible by the ability of different applications to read
informed of the amount of tax paid to the government via
electronic invoices. E-Invoice makes it possible to track
registered invoices obtained via web media. Automate the
supplier-prepared invoices in real-time. E-invoicing
process of handling bills by using AI/ML to automatically
facilitates corporate interoperability and aids in data
match invoices, submit those matches for internal approval,
reconciliation and accuracy during manual data entry. The tax
and pay the matching invoices. Artificial involvement
return procedure will be made simple by the auto-population
involves online users who have registered with the website.
of the e-invoice data on tax return forms and e-way bills [17].
Bill raised by business direct given to customer and updated
on government portal. In this procedure, GST refunds are also
matched from one businessperson to another in the event of a
supply made from one business to another (B2B). Input tax
credit was ambiguous in the pre-GST era when an interstate
supply was made, however artificial intelligence solves all of
these issues. ITC is now displayed on the GSTN if he
qualifies. The graphic below illustrates the E-invoice process
using an internet portal [16].

Accuracy
Reduce
Tax
Cost
Reduction
evasion
E- Invoice
Better Avoid Fake
reporting Bill
Real time
data
collection
Fig. 2. Benefit of E- Invoice.
A. Reduces Tax evasion
The scope of invoice manipulation will be reduced by GST's
real-time access to data since transactions will be created
before they are executed. The specifics of the output tax and
input tax credit are widely available, making it simpler for tax
agents to identify bogus input credits. In accordance with the
new system, only real ITC may be claimed.
B. Better Reporting System
UK taxpayers may now electronically submit their invoices
and have the GSTR-1 return's data automatically filled up
with their information. This streamlines the formerly
laborious reporting procedure and makes it simpler for
taxpayers to keep up with their bill payments.
C. Avoid fake bill
All invoices would be instantly transmitted after
authentication to the e-way bill and GST portals. When
submitting GST returns, this auto-population will remove the
need for human data entry. Errors in data entry will also be
decreased by the e-invoicing system.
D. QR Code
The amount of ITC must be calculated using GST invoices.
An assesses can need extra copies of an invoice they have
received or misplace an invoice they had received. The
assesses can create the invoice as many times as needed in
PDF format by scanning this code.
VI. RESEARCH CONTRIBUTION AND RECOMENDATION
The goods and services tax has significantly changed the
Indian economy. The primary goal of the GST is to decrease
tax evasion while still providing benefits to consumers.
Technology played a big part in this story. Technology is a
pillar for the implementation of the GST, so to speak.
Nevertheless, there is room for improvement in every field.
The e-invoice idea was also implemented with the use of
artificial intelligence, which reduces tax fraud under the GST
system. There are certain recommendations for electric
invoices when having commercial intelligence may be
advantageous.
• The foundation for the implementation of the Goods
and Services Tax is artificial inelegance. Every firm
shall be required to use electronic invoices.
• After full implementation, the QR code is a crucial
point where tax avoidance may be eliminated. This
is now relevant to a certain type of company.
• Some routine processes, such as the uploading of
requests that result in tax avoidance, are still
ongoing. Here, this gap needs to be closed.
• Currently, business serves as the link between the
public and the state. Where consumers may pay
taxes to the government directly, technology can be
helpful.
• The elimination of tax evasion is the primary goal of
the introduction of electronic invoicing. Since there
is no ITC involved, B2C invoices have the highest
frequency of scams. To stop tax evasion at its
source, a system that enables consumers to report
non-compliant billing should go into effect.
VII. CONCLUSION
An electronic invoice serves as evidence of tax evasion
avoidance. It's important for customers to have access to a
binder that allows them to easily find out how much tax is
paid by businesspeople. Once more, QR codes on electronic
invoices close the tax avoidance gap. An e-invoice’s
applicability is based on turnover. Tax can be evaded by a
person in a small method when an e-invoice system is not
required. It is crucial to close this gap while also requiring
less compliance. Blockchain, big data, artificial intelligence,
and robot systems all played significant roles in the
implementation of the E- Invoice GST and the reduction of
tax evasion. There are some issues like lack of connectivity,
lack of knowledge among consumers and applicability for all.
In this way AI can also implemented for awareness among
consumer for E- invoice system which reduce to tax
evasion.
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