Want to Know your GST Invoices better? Check this first

India witnessed the introduction and implementation of the Goods and Services Tax (GST) system in July 2017. GST is a single, comprehensive tax that consumers are liable to pay the central government on the goods and services they buy.

The GST Act was brought into effect to replace the old tax regime that was plagued with double taxation due to bunch of indirect taxes like the Value Added Tax (VAT), Excise Duty, Entertainment Tax, and so on. If you are new to GST, you will need to know its different types, the GST registration process, GST on rent, various GST software, and many others. This article covers the fundamentals.

The Different GST Types

There are three GST types that you need to know about:

Integrated GST (IGST)

You must pay this tax to the central government if you make supplies between states.

Central GST (CGST)

You must pay this tax to the central government if you make supplies within the state.

State GST (SGST)

You must pay this tax to the state government if you make supplies within the state.

What is a GST Invoice?

A GST invoice refers to a list of the goods or services and the price of said goods and services that the consumer has to take care of. If you are done with the online GST registration for your business, you are liable to give GST-compliant invoices to your clients for the purchase or sale of goods and services.

Why is a GST Invoice Important?

Suppliers use a GST invoice to send a GST notification to the buyer, telling them to make the necessary payments. A GST invoice also allows you to collect your Input Tax Credit (ITC) of the GST incurred. Here’s why a GST invoice is essential:

  • You must have a GST invoice to determine out the address of delivery.
  • You must have a GST invoice to note the exact time at which the goods or services are expected.
  • You must have a GST invoice to apply the goods and services tax in the case of a change in the GST tax rates.
  • You must also have a GST invoice to determine the overall value of the services or goods in question.

What does the GST Bill format look like?

Once you are done with your GST registration process, you have to give your client a GST invoice to ensure your transactions are conducted with transparency. The following fields are a part of the GST bill format:

  • Customer name
  • Customer’s GST number
  • GST Invoice number and date of issuance
  • Supplier’s signature
  • Shipping and billing address of the customer
  • The tax rates and amount
  • Supply location
  • Whether or not reverse charge under GST is applicable
  • Information on the item being shipped, such as quantity, product description, unit, and the total value of the product
  • Any taxable discounts that are valid
  • The Harmonized System of Nomenclature (HSN) code or the Service Accounting Code (SAC)

How do you issue a GST Invoice for the Supply of Goods?

You will need to issue a GST invoice in the following cases:

  • When you remove the goods if the supply of goods involves movement
  • When you deliver the products to the customer, and the supply of goods does not require movement
  • If an account payment has been authorized, and there is a continuous supply of goods

When do you not need to issue a GST Invoice?

You must keep in mind that you do not have to issue a GST invoice if the goods or services in question are valued less than Rs. 200, or if the recipient is not registered under GST or does not want a GST invoice.

What are the names of the GST Invoices copies you need to issue?

You need to issue the following GST invoice copies for the supply of goods:

Original invoice

You must issue the original GST invoice to the receiver and put a mark that says ‘Original for recipient.’

Duplicate copy

You must issue the duplicate copy to the transporter and put a mark that says ‘Duplicate for transporter.’

Triplicate copy

The supplier is supposed to keep this copy and mark it as ‘Triplicate for supplier.’