One of the taxes that has tremendously impacted how businesses and startups function in India is the Goods and Services Tax or GST. By abolishing various indirect taxes and clubbing everything under one place, it has eased out the compliance procedures for businessmen. Moreover, the new GST law runs under a covering of powerful technological system.
Any business or supplier with an aggregate turnover of above Rs. 40 Lakhs in the respective financial year needs to register for GST and raise an invoice subsequently. However, the limit in the states of Himachal Pradesh, Uttarakhand, J&K, and North-Eastern states is Rs. 20 Lakhs.
For a service provider, the aggregate turnover limit is Rs. 20 Lakhs. So if you’re providing services in hospitality, fashion, food, etc. or running an online business and your turnover exceeds the mentioned limit, then the government would charge GST.
What is a GST invoice?
When a seller or supplier of goods or services makes a sale, he provides the buyer with a receipt. This receipt or bill is called a GST invoice. It includes the amount due for payment along with the goods delivered or services provided.
A GST invoice also includes the name of the parties involved. GST registered businesses provide GST compliant invoices to their clients. Moreover, individuals can check a GST invoice to determine the prices of products and services before SGST and CGST are levied on them.
When is a GST invoice required?
As raising an invoice immediately after a service is rendered or a product is sold gets tedious, the government defined a specific time limit for suppliers to ease things up. Although, it’d vary depending on the service rendered or goods provided by the supplier. The raising of a GST invoice needs to be done in the following cases:
1. On Goods (One-time purchase)
The sellers of goods need to draw up a GST invoice. They can do it on or before the date of removal of assumed products. The removal of goods as per section 2 (96) of CGST Act, 2017 can mean the following:
- Goods have been dispatched for delivery from the supplier’s end.
- Goods have been collected by the buyer or an authorized person acting on their behalf.
2. On Goods that get supplied regularly
There are many relationships which involve a constant order of business. So if a supplier maintains such a relationship with a recipient, the former can issue a GST invoice. It can be done on or before the payment is received or account statement is generated.
3. On Services
If a service has been rendered, a GST invoice has to be issued by the supplier within 30 days of the service.
4. On Banking services and other financial services
Banks and other financial institutions provide numerous financial services to individuals and companies. However, unlike the 30 days time frame for other services, a GST invoice needs to be raised 45 days from the service rendered in this case.
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Pre-requisites of creating a GST invoice
Here are some mandatory things a GST invoice must include.
1. All supplementary invoices or bills
2. Any alternations made to the invoice by the supplier in the past
3. Must be issued by an input distributor.
Apart from the above pointers, a GST invoice must include these particulars.
4. The Name, GSTIN, and Address of the supplier issuing a GST invoice.
5. Issue Date
6. GST invoice number
5. Name, GSTIN, and Address of the receiving party (If the buyer is also registered).
6. A complete description of all goods and services provided.
7. The amount of discount, if applicable.
8. Tax Amount
9. Applicable GST rate ( including clearly mentioned rates of SGST, CGST, UTGST, IGST, and cess.)
10. Address of delivery and information
11. Signature of the authorized representative
12. Forward charge or reverse charge
13. Invoice Valuation
Note: If the recipient of the goods or services isn’t registered and the total value exceeds Rs. 50,000, then the GST invoice should carry the following particulars:
– Name of the Recipient
– Address of the Recipient
– Complete delivery address
– Name of the State
– State Code
Rules for raising a GST Invoice
Here are a few rules to be followed while raising a GST invoice.
1. Invoice copies for the supply of goods
While raising an invoice for goods supplied, the individual who’s issuing must include three copies for the people involved in the transaction. The first copy, which is also the original one is for the recipient.
The second copy that is the duplicate one would be for the individuals responsible for transporting the goods from the seller to the recipient. Whereas, the third copy is for the supplier himself.
2. Invoices copies for the supply of services
Unlike goods, services don’t need a transporter to be rendered. That is why the receipt only needs to draw two GST invoice copies. The first one belongs to the recipient of the said service while the second one or the duplicate one is for the supplier’s personal use.
3. Raising revised GST invoices
There could be times when you, as a supplier, want to alter already raised invoices. And CGST Act, 2017 allows you do to that. Under rule 53 of the Act, a revised invoice can include an upward or downward change in the prices of services rendered or goods supplied.
Moreover, a change in the rates of SGST, CGST, IGST can also be involved in a revised GST invoice. However, such an invoice has to be issued within 1 month from the issue date of the certificate of registration.
Here are the following particulars that need to be present in a revised GST invoice.
– A mark of ‘revised invoice’ wherever an alteration has been made.
– Issue date of the document
– Nature of the document
– GSTIN, Name, and Address of the supplier
– GSTIN/UIN, Name, and Address of a registered recipient
– Serial number and date of the corresponding invoice
– Shipping address along with details
– A unique serial number not exceeding 16 characters.
– Signature of the authorised representative.
4. Tax invoice for exports
When it comes to exports, the invoice must contain a declaration. Such a declaration must cite that GST has been paid on the said export. The following details about the buyer are mandatory in an export invoice: Name and Address of the buyer, Address of delivery, Destination country, and Date and number of application for removal of export goods.
Are there any possible reasons for not filing issuing an invoice?
Yes, here are the conditions under which a supplier can avoid issuing an invoice.
- If the recipient is unregistered
- When the receipt conveys that an invoice isn’t required from his/her end.
GST has provided the country with a return filing system that’s both simplified and efficient. As the GST law runs under a covering of powerful technological system, it allows the registered individuals to sign the invoice online. Moreover, it also offers personalisation of invoices.
If taxpayers registered under the GST law end up not producing an invoice, then they can be imposed with a penalty as it is an offence. However, if the services or goods are exempted from GST, then a registered business can avoid issuing an invoice. Although, the recipient would have to raise, a bill of supply.
You’d be able to raise an invoice for GST effortlessly by keeping the above pre-requisites, rules and guidelines in mind.
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