A proper GST invoice is critical to error-free return filing. Here’s everything you should know about how to go about preparing a GST compliant invoice,
Come July 1, every seller registered under Goods and Services Tax (GST) will have to issue a GST compliant invoice. GST is going to be an integrated system of buyers and sellers, which means one person’s supply must match another’s purchase. Therefore, issuing a proper GST invoice is critical to successful return filing.
Let’s understand more about invoicing under GST
Who should issue an invoice – A GST invoice should be prepared for taxable supplies made by a registered person. If a registered person is supplying exempt goods he can issue a ‘bill of supply’. Composition dealers, who have to pay a fixed rate of tax, also have to issue a ‘bill of supply’.
The GST law has specified the fields an invoice must have. Some of the fields that are required are GSTIN of buyer & supplier, date, description of goods, value, rate and amount of tax etc. There are about 16 fields that must be included in an invoice.
When is an invoice required – As straightforward as it sounds, an invoice is required every time a sale of goods or a supply of service is made by a registered person. If the value of goods and services is less than Rs 200 and where the recipient is unregistered and does not need an invoice, registered person may choose not to issue an invoice. He can issue a consolidated invoice for these transactions at the close of business on each day for his own records.
Here are some examples where an invoice must be issued, even though these may not seem like a supply -
Advance received – A ‘receipt voucher’ is issued by a supplier when an advance is received by him. If a supply is not made subsequently a ‘refund voucher’ must be issued. The GST law & rules prescribe the fields these vouchers must have.
Supply received from unregistered person by a registered person – Also called 'reverse charge' basis. Where a buyer raises an invoice on himself.
Branch transfers between branches in different states – When supply is made to a branch in a different state that has a different GSTIN, an invoice must be prepared. If a transaction takes between branches within the same state with the same registration number, no GST is applicable, hence invoice is not mandatory.
Which type of GST to charge in the invoice – Once you have figured that an invoice must be issued the next hurdle is understanding whether to charge SGST + CGST or IGST in the invoice. As a thumb rule, intra-state supplies attract SGST + CGST, and inter-state supplies attract IGST. But determining whether a supply is inter-state or intra-state may not be apparent. Say, for example, goods must be installed for supply to be complete. And the supplier and buyer have principal place of business in the same state, but installation is done in another state. Should the supplier levy SGST + CGST or IGST? Or which taxes must be charged where goods are purchased, aboard a train, and bought by passengers during journey? Or, take another case, where a web training is conducted and is accessed throughout India. What taxes should the service provider charge in this case then? To deal with these complexities, an entire chapter has been added in the IGST act, called the ‘Place of Supply of Goods & Services or Both’, Chapter -V. This chapter covers several scenarios that can help you identify where the place of supply of goods and/or services is. The supplier can find out if the place of supply is inter-state or intra-state and accordingly charge GST.
When to issue an invoice – An invoice must be issued before or at the time of removal of goods for supply. In case of services invoice may be issued before or after providing services, but it must be issued within 30 days from the date of supply of service. The invoice must be in triplicate for goods (for the recipient, transporter and supplier) and duplicate for services (for recipient and supplier). The serial number of the invoices must be issued electronically and should not exceed 16 characters.
Some people have been talking about how invoices must be ‘uploaded’ on the GST network, but this is not exactly how it is. PDF or a document is not required to be uploaded, the invoice details or data, must be made available electronically to GSTN.
(Archit Gupta is the Founder and CEO of ClearTax)
In the run-up to one of the biggest tax reforms in the country, the market is abuzz with new rules and guidelines about the Goods and Services Tax (GST). How will GST really impact your business? How will your financial reporting change? Find out the answers to all this and more, directly from industry and tax experts who will share their expertise on YourStory’s new series ‘IndiaonGST’.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
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- Goods and Services Tax
- service tax
- Taxation in India
- Value added taxes
- Invoice processing