GST Bill’s anti-profiteering Clause

GST Bill’s ‘Anti-Profiteering’ Clause: Things You Need to Know

The Goods and Services Tax Council has made several revisions of the Goods and Services Tax model on the basis of the representations provided by the industry stakeholders. These include simplification of work procedures, allocating lower tax slabs to certain goods, elimination of taxes on securities, etc.

One of the most important changes made in the GST model law is the introduction of the “anti-profiteering” clause.  As per Clause 171 businesses are required to pass on the benefits of reduction in taxes and refunds received through input tax credits or otherwise to their customers by lowering the prices of their goods and services appropriately.

Importance of Anti-Profiteering Clause in the GST Regime

Earlier, when Goods and Services tax was introduced in other countries viz. Australia, New Zealand, Canada, etc. they observed a high surge in inflation, albeit for a limited period. This was mainly because of the gaps between the concept and its execution.

GST can only serve its purpose when the entire chain of a business works in sync. So, manufacturers must lower taxes to benefit retailers which must again revise the rates to benefit the consumers.

Even though GST is meant to eliminate the cascading effect of taxes and thus reduce costs of goods and services for the end consumers, the responsibility lies with the manufacturers, traders, and service providers that are a part of the business cycle. The anti-profiteering clause was created to keep this in check and punish those who engage in unfair business practices.

GST Anti-Profiteering Panel

The government has set a five-member anti-profiteering panel with a sunset date of two years. This committee will ensure that the businesses pass on the benefits of tax reduction to their consumers. It will also have the authority to take appropriate action on the non-compliant taxpayers.

The government has released the anti-profiteering rules under the GST regime which will empower the anti-profiteering panel so that they can:

  • Order reduction in prices in accordance with the lowering of taxes under GST.
  • Charge penalties on those found guilty or even cancel their registration on reasonable grounds.
  • Seek return of the undue profits earned from not passing on the benefit of reduced taxes to the consumers along with an 18% interest rate.
  • Recover funds that are not claimed through returns by eligible taxpayers, or in case the taxpayers are unidentifiable. As per Section 57 of SGST and CGST Acts, the recovered amount has to be deposited in the Consumer Welfare Fund.

What Should You Expect?

In the words of India’s revenue secretary Hasmukh Adhia, the government wants the companies to cooperate and hopes that it doesn’t have to use the anti-profiteering “weapon”.

While the government may have noble intentions with its anti-profiteering clause, the end result may be far from the expectations. The authority set for exercising this clause is meant to ensure that businesses don’t generate unfair profits by increasing the prices of goods and commodities arbitrarily. However, it also makes it easier for them to interfere with the businesses unnecessarily. They may force a taxable person to reduce prices at their discretion even if it results in an undeserving loss. Moreover, they can create unnecessary hurdles and affect the flow of business operations with tedious formalities and investigations.

In the past, Malaysia also tried an anti-profiteering and price control law which turned out to be an utter disaster. The initiative backfired and was abandoned shortly as a result. Thus, we can’t rule out the possibility of something similar happening in India too.

Conclusion

For now, the impact of the anti-profiteering clause is open to interpretation and speculation. However, as a business owner, it’s in your best interest to comply with GST regulations and reduce the prices of your goods and/or services in accordance with the provision of input tax credits and reduction in taxes as applicable.

Understanding place of supply

From Editor’s Desk: Understanding Place of Supply

About the Author
Swapnil Gorde
Domain Expert, GST
Swapnil is a tax expert having expertise in direct and indirect taxation for over 15 years. He has been speaking at ICAI conferences on E-governance and has post qualification expertise of more than 20 years. Currently, he is working with
numberz as GST consultant.

To understand the Place of Supply under GST, let us first understand Taxable Event of tax. It is important to know the taxable event under any law because it is the activity which attracts the tax levy. This enables the reader to know when he is liable to pay tax under various law concerned.

So, let us first understand various taxable events in the present tax structure.

Taxable events under current structure

 

From above, you can make out that, for different, laws there are different taxable events and that makes it complicated for the user to understand the law and their implication on his business.

Now under proposed GST structure, there is only one taxable event i.e. Supply of Goods or Services. It is very important, therefore, to understand the place of supply in determining the right charge of tax on supply. The model GST Law lays down the criteria to determine the place of supply. Based on these criteria, you can treat the supply of goods or services as either Intra-State (within the State) or Inter-State (Outside the State).

The location of Goods supplied or Service provider will decide which tax to levy. Based on place of supply, one will able to determine whether to charge CGST & SGST or IGST. So, it is very important for dealers to identify the place of supply.

There are two important components which determine the which tax to be charged for.

  1. Location of Supplier: Registered Place of Business
  2. Place of Supply: It is registered place of business of recipient.

Let’s now understand how a place of supply will change the taxability under GST with some examples.

M/s Alert Car Accessories & Components Pvt. Ltd., having registered office in Mumbai, Maharashtra, had supplied spare parts to M/s True Value Car Services Pvt. Ltd. has registered place of business in, Pune, Maharashtra.

 

Let’s now consider another Scenario. M/s Alert Car Accessories & Components Pvt. Ltd., having registered office in Mumbai, Maharashtra, had supplied spare parts to M/s True Value Car Services Pvt. Ltd. Having registered place of business in, Hyderabad, Telangana State.

 

Apart from the above example following are also treated as Inter State Supply under GST

  1. Import of goods or services
  2. Export of goods or services
  3. Supply of goods or services to or by a SEZ developer or SEZ unit, even if the supply is within the state.

Section 70 under Model GST Act, make it necessary for the Taxpayer to collect the right amount of Tax. If assessee fails to deduct correct tax, then there will be the penalty which needs to be paid by dealers. The dealer must prove that the place of delivery mentioned is correct, so considering this, a dealer needs to maintain such records of the place of delivery which enables the GST officer to verify the place of supply. Failing which dealer will be liable to pay tax as determined by the GST officer.

E-Way Bills Rules Under GST

All You Need To Know About The E-Way Bill Under GST

Movement of goods in India, especially from one state to another has been a problem since years. The reason? Waybill compliance that’s riddled with all kinds of complexities. However, the Goods and Services Tax is expected to mark a significant improvement with the e-way bills.

Movement of Goods Now

Let’s first understand what happens when goods are transported from one place to another within the same state and when to a different state.

Under the current regime, the state government is responsible for imposing taxes on the intrastate transportation of the goods and the central government is responsible for imposing taxes on interstate transportation of the goods.

To prevent tax evasion and compliant transportation of goods, most states have established multiple check-posts on the national highways and borders. When a transporter arrives at a check-post, they have to furnish certain documents such as waybill, invoices, challan, etc. to receive clearance.

Some states have made compliance easier for the suppliers through digitised procedures. For instance, in Karnataka, e-Sugam is an electronic system that allows the registered dealers to upload the details of the shipments and receive unique IDs in return. The transporters can use these IDs at the check posts for verification and clearance.

Movement of Goods Under GST: Enter e-way Bill

Once GST is implemented, the current waybill will be replaced by the e-way bills which is an electronic waybill.  Taxpayers moving goods worth more than Rs. 50,000 are required to generate e-way bills under the GST regime.

The following are some of the key aspects of the e-way bill:

  1. An e-way bills must be generated when there is a movement of goods of value above Rs. 50,000 by a registered person. However, they or the transporter can carry an e-way bills even if the value of the goods is less than Rs. 50,000.
  2. The following are some of the ways an e-way bills can be generated:
  • A registered person can generate an e-way bills by filling part A of Form GSTINS-1.
  • A recipient of the goods can generate an e-way bills by filling part B of Form GSTINS-1.
  • A registered person who is also a consignor or consignee and goods are handed over to a transporter can generate an e-way bills by filling both part A and part B of Form GSTINS-1.
  • A transporter can generate an e-way bills by filling form GSTINS-1 himself, in case the consignor hasn’t.
  1. Each e-way bills will have a certain validity will be based on the distance travelled by the goods. The following can be referred for the relation between the distance and validity:
  • Less than 100 km: 1 day
  • 100km to 300km: 3 days
  • 300km to 500km: 5 days
  • 500km to 1000km: 10 days
  • 1000km or more: 15 days
  1. While e-way bills are to be generated and cancellated through GSN Network portal, registered taxpayers can also do that through SMS.

An Example of e-way Bills Under GST

  • Trader A hands over goods to transporter T to deliver them to another Trader
  • Trader A enters the details of the stock and the transporter in Part A and Part B of Form GST INS 01 respectively.
  • Transporter T generates an e-way bill using the details from Part A of Form GST INS 01.
  • As the e-way bill is generated, a unique e-way bill number (EBN) is shared with A, T, and B.
  • B can now accept or reject the goods mentioned in the e-way bill. If no response is given in 72 hours, the consignment is considered accepted.

E-way bill is designed to make compliance of transportation of goods easier and to prevent tax evasion. So, for a smoother transition to GST, it is best that you get around the e-way bill system as soon as possible.

E-Ledgers Under GST

E-Ledgers Under GST: Here’s What You Need to Know

GST is all about transparency, simplicity, and growth. However, adopting digital technology is a must for all of these. This is why GST Model Law will ensure that the records of all the transactions, generated invoices, refunds, tax credits, etc. are maintained online. This resulted in the need of e-ledgers.

A taxable person who comes under GST regime has to create an account on the GST portal. Once this is done they will get access to three e-ledgers:

  • e-cash ledger
  • e-credit ledger
  • e-liability ledger

But what are these ledgers, and how do they work? Let’s take a look at them, one at a time.

e-Cash Ledger

The e-cash ledger will reflect your payments towards tax, penalty, interest, etc. You can make these payments through any of the following modes:

  • Debit or credit card
  • Internet banking
  • NEFT or RTGS
  • Over the Counter (OTC) payment for amounts up to Rs. 10,000 in cash, or through DD or cheque

e-Credit Ledger

All the input credits under the main heads i.e. SGST, CGST, and IGST will be credited to the e-credit ledger. In other words- the total amount of tax payable will be reflected in this ledger. However, if you will claim refunds through input tax credits, the appropriate amount will be debited from it.

Note: you will be allowed to use the balance of this ledger for the payment of taxes only. For other payments such as interest, fee, etc. you will have to use e-cash ledger.

e-Liability Ledger

The e-liability ledger will reflect your tax liability for a particular month after final netting is done. It is also auto-populated.

To understand how all the 3 e-ledgers will work in reality, let’s consider an example:

  • S is a supplier who has to file the GST return for a month. So, he/she will use the form GSTR 1 and add the details of outward supplies for the month.
  • B is the buyer who will find the details of the supplied filed by S in the form GSTR 2a.
  • S will check his/her e-ledger to find out their tax liability and the payment of the same. He/she will check the e-liability ledger for checking the tax amount liable to him and e-credit ledger to see if he/she has enough credits for the payment of CGST, SGST, and IGST. If there are, he/she will pay the taxes using the same. If not, then he/she will use the e-cash ledger to pay the taxes through any of the modes mentioned above.

Note: It seems there is no provision for cross adjustments in the GST scheme. So, you can pay CGST only from the CGST balance, IGST only from the IGST balance, and SGST only from the SGST balance in your e-credit ledger.

Summing it Up

To simplify the entire system:

  • e-cash ledger is for recording your payments, taxes, fees, etc.
  • e-credit ledger is for reflecting your SGST, CGST, and IGST credits available through ITC (Input Tax Credits) which you can also use for paying these taxes.
  • e-liability ledger is for showing your tax liabilities in an easy and simple manner.

Understanding the working of all these three e-ledgers is important to move to the GST regime smoothly. If you have a strong grasp of the basics, that’s enough to get you going when the Goods and Services Tax is rolled out on 1st July.

Composite supply and Mixed supply under GST

What is Mixed Supply and Composite Supply in GST?

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GST is different than the current taxation system in many ways. However, one of the biggest changes is what constitutes as a taxable event. Talking about today, while the taxable event for VAT is the “sale of goods”, and of Service Tax is “provision of taxable services”, and of Central Excise is “removal of excisable goods”, GST has just one, which is “supply of goods and/or services”. Once GST is implemented, the concept of manufacturing, selling, etc. will be eliminated from the taxation point of view. Instead, the focus will be only on the “supply” of goods and/or services.

Supply in GST

While the concept of “supply” is fairly easy to understand in GST, there are two categories of the same which may be somewhat confusing for an individual.

These are:

● Composite supply

● Mixed supply

Understanding the difference between the two is important as it will help you determine how GST is levied in both cases.

Composite Supply

Composite supply is not something that’s entirely new. It’s similar to the concept of bundled services under the Service Tax Law. As per GST Act, Section 2(30), composite supply means a supply of two or more goods/services in a bundle, in which one is the principal supply (the predominant or primary item in the bundle).

For a supply to be considered as a composite supply the following two conditions must be met:

● It should comprise of 2 or more goods and/or services

● It should be a natural bundle. In other words- the goods and/or services

In the bundle should be provided together in the normal course of business and can’t be separated.

Since in a composite supply there are multiple items which may attract different GST rates, the bundle is taxed at the rate of the principal supply.

Let’s consider an example:

A hotel offers a 3 days-2 nights package under which food is also covered. Now, let’s say the rate of GST for accommodation is 28%, and that for food is 18%.

Since the whole package is supplied as a natural bundle, and the principal supply is the accommodation, the rate of tax levied on the entire bundle would be 28%.

Mixed Supply

As per GST Act, mixed supply is a supply of two or more supplies of goods and/or services that are combined together for a single price. However, unlike composite supply (refer the second condition), here the supplier can sell both supplies individually too.

In a mixed supply, the rate of tax on the bundle is determined by the item that has the highest rate of tax.

Let’s consider an example:

A trader is selling pastries, cakes, and namkeen in a bundle. This would constitute as a mixed supply because it’s possible for the seller to sell these items separately. Now, since pastries and cakes attract an 18% GST rate, and namkeen a 12% GST rate, the rate applicable on the complete bundle would be 18% (it being the highest).

If you are going to sell goods/services under GST regime then you can bundle them in a way that you can get the maximum benefit. And of course, understanding the types of supply- composite and mixed is essential for that.

Impact of GST on traders

GST Impact on the Traders in India

The Goods and Services Tax will bring several changes in almost every industry in India. However, the manufacturers and traders will be affected by it the most.

The following are some of the most important changes that the traders will need to wrap their head’s around with:

Goods vs Services

One of the biggest reasons why the current tax regime is so complicated is because there are frequent disputes on certain transactions as to whether they should be categorized as goods or services. Creating invoices is also difficult for the traders for the same reason as two separate rates are charged for goods and services. However, since GST will consider both of these equally and levy the same charge on both, it will make doing business a lot simpler and easier.

Common Market

At present, goods are mostly sold within the state to prevent the CST and entry tax. However, once GST is implemented, traders will be able to sell their products to the farthest corners of the country without worrying about taxes, as there will be no entry tax or CST.

Entry Tax

The business industry has to deal with great losses in the current system because the trucks responsible for goods transportation waste a lot of time at the check-posts. In fact, it has been found that long-distance trucks are parked 60% of the time.

Since GST aims at eliminating the practice of tax collection at the borders, it will benefit the businesses in two ways:

  • They will save money on the border tax.
  • They will be able to deliver goods to their customers faster and thus improve business efficiency and also minimize transportation costs.

Rate of Tax

The GST regime will follow a four-tier tax structure of 5%, 12%, 18% and 28%, with lower rates for the essential goods and higher rates for the luxury goods. In fact, for the essential items such as food, a zero rate will be levied. On the other hand, luxury items such as tobacco and aerated drinks will be levied an additional cess apart from the base rate itself.

To extend relief to small traders, the Goods and Services Council has also settled for the rates 2%, 1% and 5% for small manufacturers, small traders, and small restaurants, respectively. These entities will come under the new Composition scheme, the eligibility criteria for which is an annual turnover of less than Rs.50 lakhs.

Input Tax Credit

One of the most anticipated reforms of GST is Input Tax Credit which allows the traders to claim the repeat tax paid by them. However, there are a few challenges to this system. For instance, if a trader has paid a repeat tax to their supplier then they can claim a refund (credit) only if the supplier paid the tax themselves. Since there is a chain of vendors, manufacturers, and traders in the process, they all have to comply with the GST law and pay taxes so that the eligible taxpayers can claim input credit.

GST will make invoicing, filing of returns, and registration electronic, and the traders will have to deal with these by entering information through their accounts via the Internet. Although some of the traders and small business owners might not be happy with the implementation of digitization in terms of the same, replacing the traditional way, it’s in their best interest to adapt accordingly.

GST impact on startups and micro enterprises

GST Impact on Micro Enterprises and Startups

The GST law has been in talks for many years, but it’s only now that it’s finally going to be implemented in the nation from July 1. The business industry awaits this day, although there is still a lot of confusion and uncertainty.

Regardless of how everyone feels about the new taxation regime, one thing is for sure that it will be beneficial for the businesses and the consumers both. However, startups and micro-enterprises are going to be at a big advantage because of the following:

Starting Business Made Easy

Under the current system, the troubles for startups and small business owners begin from the first step itself, which is registration. The business owners have to pay a number of visits to the Sales Tax department for VAT registration. Also, if the business has multiple branches in multiple states, then getting VAT registration can easily become a nightmare due to different rules and regulations followed by different states.

GST is here to change all the problems mentioned above. It is a centralized system that will allow aspiring entrepreneurs to register their businesses online. They can also file returns, claim input tax credit, send invoices, etc. through their GST account. Thus, there will be less room for corruption and tax evasion.

One Big Central Market

A mobile phone of a particular model is today sold at a different price depending on which state you buy it from. This is because the rate of VAT and other taxes can vary in different states under the current system. The brick and mortar stores have thus suffered a lot due to this as they are unable to match the prices of the products sold in the states that have lower tax rates.

These businesses don’t only have to compete with other businesses that could afford to offer low prices but also with imports that often cost less due to the lack of cascading effect of taxes. Thus, GST will promote the growth of domestic companies and startups to do business without fearing the businesses based overseas.

For the most part, GST will be helpful for SMEs and startups. However, there will a few challenges too. For starters, businesses that supply both goods and services and have an annual turnover of less than 1.5 crores may have to face compliance issues due to the nature of their business and deal with both state and central administration. Also, the threshold level for GST registration is 10 lakhs for the North-Eastern States and 20 Lakhs for the rest of India. Although this is better from the previous 5 lakhs and 10 lakhs respectively, it will still cause startups and small businesses owners to pay a high tax.

All in all, while there are a few hardships that GST will bring to the table, it will be a welcoming change for the entire business industry nonetheless. The specifics of the law such as exact rate for different product and service categorized, however, will be finalized by the GST council soon.

Types of GSTR, due dates and their applicability

Types of GST Returns, and Their Applicability to your Business

The average taxpayer who runs a business has to deal with a number of taxes. If they are compliant under VAT, Service Tax, etc. then they have to file returns as per the law of their respective state (as these taxes vary from one Indian State to another). Apart from the returns, there are annexures and registers for all these taxes that are to be provided on a monthly, half yearly or yearly basis. Without a doubt, the process is tedious and complicated.

GST aims at making filing the returns easier and simpler as the compliant businessmen will need to file only the GST returns. The GST council has released the details of the all 11 types of returns which are to be filed electronically through the Common Portal. You may need to file only a few of these depending on your business type.

Regular Businesses

If you are a GST compliant business who has to pay the GST in the standard manner then your business will be considered as a regular business.

You will need to file three types of returns on a monthly basis, which are GSTR-1, GSTR-2, and GSTR-3. However, the returns GSTR-2 and GSTR-3 will be automatically created for you using the details from the GSTR-1 return.

The GSTR-1 is to be filed along with the details of the outward supplies made by you in the previous month. These details will result in the auto-population of the inward supplies, i.e. form GSTR-2A. You can confirm these details which will result in the creation of the form GSTR 2.

Once you have provided the details of goods/services bought and sold through the forms GSTR-1 and GSTR-2 respectively, the information will result in the automatic creation of GSTR-3. You can now approve this return or make changes if required.

You can refer to the table below to understand the timelines associated with all the returns:

Return Form Details to be filed Concerned Person Deadline
GSTR-1 Outward supplies that are taxable under GST Registered Taxable Supplier 10th of the next month
GSTR-2 Inward supplies that are taxable under GST Registered Taxable Recipient 15th of the next month
GSTR-3 Monthly GST returns that are based on the details of outward supplies and inward supplies Registered Taxable Person 20th of the next month
GSTR-9 Annual Return Registered Taxable Person 31st December of the next financial year

 

Composition Businesses

The government has issued a Composition Scheme to make GST compliance easier for small businesses. The scheme has various benefits for eligible businesses, such as lower GST tax rate, quarterly tax returns (as opposed to monthly), etc.

If your annual turnover does not exceed Rs. 50 lakhs then you can opt for GST payment under the composition scheme. By doing so, you have to file returns in the following manner:

Return Form Details to be filed Concerned Person Deadline
GSTR-4 Quarterly return for compounding taxable person. Composition Supplier 18th of the next month after each quarter
GSTR-9A Annual return Compounding Taxable Person 31st December of the next financial year

 

Other Businesses

There are a few businesses that are not covered in the previous categories. These belong to non-resident foreign taxable persons, electronic commerce operators, etc. Their returns along with the timelines are given in the table below.

Return Form Details to be filed Concerned Person Deadline
GSTR-5 Return for Non-Resident foreign taxable person Non-Resident Taxable Person 10th of every month
GSTR-6 Return for Input Service Distributor Input Service Distributor 13th of every month
GSTR-7 Return for authorities deducting tax at source. Tax Deductor 10th of every month
GSTR-7 Taxable supplies of an e-commerce operator, and the overall tax collected E-commerce Operator/Tax Collector 10th of every month
GST

GST and its implications for small business.

GST stands for good and service tax. GST implementation is said to be landmark reform in terms of taxation in India. While small business owners think as after Goods and Service Tax (GST) they need to deal with one tax inspector instead of many as in today’s scenario. GST will raise the bar for minimum turnover from 5L to 10L also it will lower the taxes whose turnover will lie in the range of 10-50L. Hence it will come as a big relief to small business owners. After demonetization and implementation of GST, Small businesses are forced to move on digital currency and stay away from heavy cash dealings. Also, it will allow them for better reporting and transparency. It will improve their chances to get access to credit from primary financial institutions instead of raising fund from the secondary market. After demonetization lending rate offers are bound to go down by financial institutions. Registering and expansion policies will be easier in Goods & Service Tax (GST) regime as India will become one market. Hence now selling goods across states becomes easier as intrastate transactions because cross-border taxes are being eliminated.

Also once small business gets Goods & Service Tax (GST) registration, it needs to generate GST based TAX invoice for compliance. This comes as a big challenge for small business owners as they don’t have enough budget to support the infrastructure required for meeting all the compliances in this digital era. But once all the invoices and cash flow actually move on to cloud solution and then it gets automatically reconcile with the master database of Indian government for Goods & Service Tax (GST) filing. Cloud-based solutions will play an important role in letting these small businesses file their GST with ease, both in terms of efficiency and monetary benefit. Security of these cloud-based solutions is the key issue for any small business out there as they have very specific customer segment and they play in the niche market with their product or services. Hence for any SMB to adopt one of many cloud-based solutions is going to be a key decision for data security. SMB needs a single platform where it can manage its own cash flow, raise invoices, manage expenses, file GST and get easy credit facility. Considering all these factors in mind we have created an awesome cloud based solution numberz, which actually helps in all these services with high security of data encryption. All data is stored on cloud only and is easily accessible from any device anywhere. It makes your business on the go and one can avail any of these facilities from one’s mobile handset or tablet. The idea is to reduce friction among all the agents involved and keep complete transparency among all parties involved.

Invoicing under GST

Invoicing Under GST: Everything you Need to Know

Almost every kind of indirect tax in India requires the preparation of an invoice. This is because not only it serves as a proof of a sale but also provides information on every other form of supply such as exchange, transfer, barter, etc.

With the implementation of GST however, the way invoices are created will be changed. According to the GST regime, two types of invoices have to be issued either before or on the occurrence of a particular event within a certain period. These invoices are the tax invoice, and bill of supply.

Tax Invoice

If you are a registered taxable person under the GST regime who is supplying goods or services, then you are required to issue a tax invoice for all the supplies involved.

Bill of Supply

If you are supplying goods or services that are exempted from GST, or if have opted for the composition levy scheme (provided under the GST regime itself) then you will need to issue a bill or supply rather than the tax invoice for the supplies. Plus, you can’t use the bill of supply to claim input tax credits.

What are the Differences Between a Tax Invoice and a Bill of Supply?

  • A tax invoice is to be issued to a taxable supplier liable under GST regime, who is supplying good and/or services that are taxable. A bill of supply, on the other hand, is to be issued by the supplier of goods and/or service that are exempt from GST, or in case the supplier is a composition taxpayer.
  • You can claim Input Tax Credits with a tax invoice, but not with a bill of supply.
  • Reverse charge (in which a tax paid is by the recipient of goods/services instead of the supplier) in allowed for the registered GST sellers. However, taxpayers under the composition scheme have to pay the taxes themselves.

How to Issue a Tax Invoice?

If you are a registered taxable person under the GST scheme, then you need to issue a tax invoice either before or at the time of when you have to:

  • Remove goods, in case the supply includes movement of goods.
  • Issue several statement accounts in succession.
  • Deliver goods to the receiver, in case the supply doesn’t include the movement of goods.

You have to issue a tax invoice in accordance with the following timelines:

  • Within 30 days under normal circumstances.
  • Within 30 days from the date of due payment, if there is a continuous supply of services and the due date is ascertainable.
  • Within 30 days from the date of payment, if there is a continuous supply of services and the due date is unascertainable.
  • At the time of cessation, if there is a continuous supply of services and the contract expires/made to nullify.
  • Within 45 days from the supply of service, if you are a bank on NBFC.

The following are the details to be included in your tax invoice:

  • Your name, address, and the GSTIN number or registration number.
  • A consecutive serial number that doesn’t contain any special symbols (alphabets and numbers only) and is different for every financial year. For instance, for the financial year 2017-2018, you can use 2017NameOfCompany.
  • Issuing date.
  • Description of the goods and services involved.
  • The total value of the goods and services.
  • Rate of tax levied (CGST, SGST, or IGST)
  • Place of supply along with State name, if it’s an interstate

If you are an exporter then you need to include some additional information in the invoice, which is:

  • Name of the country along with the address you are exporting the goods to
  • The statement “Supply meant for export on payment of IGST” or “Supply meant for export under bond without payment of IGST”, depending on the case
  • Your name and address
  • Number and date of ARE-1, which is the application for removal of goods for export

If you are a goods transport agency then the invoice issued by you should have the following information:

  • Gross weight of the shipment
  • Name of the consignee and consignor
  • Registration number of the carriage used for transportation
  • GSTIN of the taxpayer
  • Details of the shipment, such as the address of origin and destination

How many copies of tax invoices have to be issued?

If you are supplying goods then you are required to create three copies of the invoice:

  • Original Invoice: This is the original invoice marked as “ORIGINAL FOR RECIPIENT” which you have to issue to the buyer of the goods.
  • Duplicate Copy: This is the second copy of the original invoice marked as “DUPLICATE FOR TRANSPORTER” which you have to issue to the delivery boy (the one transporting the goods). However, if you have an invoice reference number then the delivery boy needn’t carry the duplicate invoice.
  • Triplicate Copy: This is the final copy of the tax invoice (marked “TRIPLICATE FOR SUPPLIER”) that you have to keep with yourself for record purposes.

In case you are supplying services then you need to create just two copies of the invoices:

  • Original Copy: This one is marked “ORIGINAL FOR RECIPIENT”.
  • Triplicate Copy: This one is marked “TRIPLICATE FOR SUPPLIER”.

How to Issue a Bill of Supply?

If you have opted for the GST composition scheme then instead of tax invoice you have to issue a bill of supply, as you are not allowed to collect the tax.

The bill of supply should include the following:

  • Your name, address, and GSTIN
  • Date of issue.
  • A consecutive serial number that doesn’t contain any special symbols (alphabets and numbers only) and is different for every financial year. For instance, for the financial year 2017-2018, you can use 2017NameOfCompany.
  • Description of the goods and services involved.
  • The total value of the goods and services.
  • HSN code (in case of goods) or Accounting code (in case of services)
  • Your Signature (either digital or non-digital).

Also, if the total value of the goods supplied is less than Rs. 100 then you are not required to issue a bill of supply unless the receiver insists.