About GST Invoice
If sell products or services in India, you must be issuing
invoice to your customers. Every business in India needs to know about the new
GST invoice rules going forward. In this article, we’ve explained how to create
GST invoice, various components that must be there on invoice, format of GST
invoice and much more.
GST, as we know it, is going to change the way the country
complies with taxation on a mass scale. GST is a destination-based,
transaction-wise reporting tax structure, which brings together the States and
Union Territories of India under one roof and removes multiple tax levies. Its
primary aim is to bring all the invoices under GST under the ambit of the
statute.
To seek total clarity in all transactions throughout the
flow of the same, it requires a heavy-duty reporting structure that is
consistent across the process flow, which records the details until the last
mile. For this, GST prescribes to have a consistent invoice based reporting
system that records all the important information related to the movement of
goods from the place of origin to the destination.
The invoice becomes a crucial factor in the whole purchase
or sale transaction, as it will form the crux of uploading returns and fetching
credit. The logistics or supply chain will also be strengthened when there is a
common document throughout the whole flow. Thus, assesses must take good care
in maintaining the invoices, uploading returns and that too, on time, to get
smooth credits and a better working capital.
The invoices have been divided into several categories under
the GST regime. There is a typical GST invoice, vouchers, debit notes, credit
notes, supplementary invoice and a bill of supply. These are the only
documents, which are given importance in GST. It removes the prevalent
invoicing system that includes Tax Invoice, VAT Invoice, Excise Invoice and a
Retail or Commercial Invoice. All these invoices were mutually exclusive to
each other. They were charged under separate laws having separate jurisdiction
and applicability. Since GST is a One Nation Tax, it will be mandatory to issue
only the former documents, by ALL taxpayers.
Invoicing under GST
GST defines a transaction as ‘Supply’ when there is a
transfer, exchange, rental, lease, barter, disposal or license of goods or
services. Whenever a transaction takes place, a tax invoice has to be issued
depending on the occurrence of any such event or within a prescribed time
limit. Hence, every taxpayer registered under the GST network shall be required
to issue a tax invoice for the supply of goods or services.
Tax invoices have to be raised under certain circumstances.
In the case of supply of goods, the invoices shall be raised within the prescribed
time as enumerated below.
- · When there is actual movement of goods, then before or at the time of removal of such goods.
- · If there is no movement involved, then earlier of delivery or making available of such goods.
- · In case of successive issuance of goods, then earlier of each such issuance.
- · On the receipt of goods when on GST is applicable on a reverse charge basis
- · When goods are sold on an approval basis, then earlier of 6 months from the removal date or before or at the time of such removal.
Similarly, in the case of supply of services, the invoice
has to be issued as follows, within the mentioned time.
- · Within 30 days from the actual supply
- · In case of continuous supply where due date can be ascertained, then 30 days from such due date
- · In case of continuous supply where due date cannot be ascertained, then 30 days from actual payment date
- · In case of cessation of supply before the contract ends, then at the time of such cessation.
The due date of 30 days is 45 days in case of banks and
other financial institutions.
These invoices have to be issued in TRIPLICATE in the case
of supply of goods, original for the recipient, duplicate for the transporter
and triplicate copy for the supplier. Likewise, in case of supply of services,
the invoices have to be issued in DUPLICATE, where the original will be meant
for the recipient and the duplicate copy will be for the supplier.
How to Create GST Invoice
The Government of India has come out with a sample GST
Invoice format. A sample format is shown below. It is better to issue invoices
on the same lines as the example since your Input Tax Credit largely depends on
the Invoice Number and its proper reporting. The serial number of the invoice
forms the basis of mismatch or matching the invoices between the supplier and
the receiver, giving a seamless, hassle-free credit flow.
GST Invoice Format
There is certain crucial information that needs to be
mentioned mandatorily in the GST invoice. These are:
- Name, address and the GSTIN of the supplier
- The nature of invoice (tax invoice, supplementary invoice or revised invoice)
- Invoice number (this shall be a consecutive alpha-numeric or numeric series, specific for a financial year)
- Date of Invoice
- Name, address and the GSTIN of the recipient
- Where the value of the goods exceeds Rupees Fifty Thousand and the recipient is an unregistered person, then name and address of such recipient and the delivery address of the consignment.
- Description of the goods or services
- HSN code of the goods or the Accounting Code of the Services
- Quantity of the goods or services
- Total value of the goods or services
- Rate of Tax on each item
- Tax amount charged, on account of CGST, IGST, and SGST to be shown separately under different columns
- Name of the supplying State and the place of supply
- Place of delivery
- A statement mentioning whether reverse charge is applicable or not
- Trade Discounts not forming part of value of the goods, if any
- Signature in physical form or Digital Signature of the supplier or an authorized person, duly certifying the invoice
In addition to the above particulars, an export invoice
shall include the following.
- A mandatory statement mentioning these specific words – “SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST.”
- Country of destination
- Delivery address
- The Number and date of application of form for removal, i.e. Form ARE-1
Likewise, when an Input Service Distributor issues the
invoice, then “Amount of credit distributed” shall also be added to the invoice
instead of the rate and value of the goods or services.
If you are a Goods Transport Agency, you are a critical link
in the supply chain and has to include the following in your invoice.
- Name and address of the consignor and the consignee
- Registered Vehicle number
- Gross weight of the consignment
- Place of Origin
- Destination
- GSTIN of the person liable to pay tax
The transporter does not require to the
Duplicate copy of the Invoice. Instead, they can opt for Invoice Reference
Number, which can be generated by the supplier by uploading the tax invoice
onto the GST Portal. The portal shall generate a number that is valid for 30
days from such date.
Apart from the tax invoice, other important documents
include Supplementary Invoice, Revised Invoice, Debit or Credit Notes, and Bill
of Supply. Let us discuss each one in details.
Bill of Supply
When a registered supplier makes a supply of exempted goods
or services, or the supplier is registered under the composition scheme, then
he has to issue a Bill of Supply instead of a tax invoice.
Supplementary Invoice
/ Debit Note
Whenever there is an upward revision in prices of a good or
service supplied earlier and the same was chargeable to GST, then the supplier
is liable to issue a supplementary invoice to the recipient. The said
supplementary invoice should be raised within 30 days from the date of such
price revision.
Credit Note
Just like the debit note where there is an upward revision
in price, credit note has to be issued when there is a downward revision of
price. GST should have been charged in the previous transaction. The credit
note has to be issued on or before 30th September of the next financial year or
before filing the annual return of GST, whichever is earlier.
The contents of these documents are the same as that of tax
invoice. The only major difference is that the nature of the invoice must be
mentioned in Bold specifically on top of the invoice. For e.g. “SUPPLEMENTARY
INVOICE,” “DEBIT NOTE” etc.
All the above documents, including the tax invoice, has to
be maintained for 6 years (currently prescribed by the GST council). Thus, it
requires a very strong IT system that records and maintains such a database for
the prescribed time.
Cross – Referencing
of Invoices
Since the invoice forms a crucial part in claiming credit
for the GST paid therein, it is obligatory to upload returns on time so that
the credit flows to the end customer seamlessly. The same invoice has to be
reported by the Supplier and the recipient to get actual ITC.
The Way Forward
To get a seamless flow of credit, it is vital to join hands
with Gst Suvidha Kendra by EL Ventures that can help you maintain the books of
accounts in the proper format. You have to ensure that your master data is up
to date and all the goods and services are attached with their respective HSN
or Accounting codes. The tax amount, CGST, SGST or IGST has to be properly
mentioned in the GST invoice. A robust IT system can enable you to collaborate
the purchase and sale data, upload the same in returns and reconcile the same with
the vendors and customers.
It is high time that you start preparing ourself with the
onset of GST as any non-compliance in this regime can lead to loss of credit as
well as customers.
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ReplyDeleteBilling Software
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ReplyDeleteGST Registration
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