Goods and Service Tax has so far been the most radical change in the Indian indirect tax regime. It subsumed all the incidental taxes and was introduced with the sole purpose of making tax compliance easier for individuals and businesses.
With GST, we can expect the beginning of a more stable and organised taxation process for businesses across the country. As such, taxpayers are required to be compliant with the rules and regulations.
What Is A GST Invoice?
For any transaction of a good or service, a bill of sale needs to be generated, termed as a GST invoice. It is a necessary part of compliance with the GST rules to create and provide the buyers with such invoice.
It’s easy to doubt the actual importance of a GST compliant invoice. Many businesses would prefer to spend less time on what seems like trivial paperwork. But for the fair trade of goods and services, it is vital to record such minute details.
The GST proposes that businesses must include some fields in the invoice. Let us deep-dive into some of the critical elements of a GST compliant invoice.
Buyer And Seller Details
The invoice number and date are essential to record the number of transactions on a particular day in a financial year. However, the most important details in a GST invoice are the name and billing address of the customer. This ensures transparency as each transaction can then be traced to not only the seller but also the buyer.
Also, the GST Identification Number (GSTIN) of both parties should be recorded on the invoice. The bill must mention the place of supply as well.
Furthermore, if you are providing goods, you must include the HSN code, unless the annual turnover of your business is less than Rs 1.5 crores. However, for service providers, the SAC code should be included. Finally, the signature of the supplier is also mandatory.
The GST invoice should mention item details such as description and quantity or duration for which the service is purchased. It must also display the unit of the product purchased along with taxable value and discounts.
As the gst rate in india varies from item to item, the bill must point it out for each item or service sold or purchased. Although the government has clarified the tax slabs for different products, service providers must ensure total compliance and further divide the tax amount into CGST as well as SGST.
Other Important Details
An important thing to note is that if the recipient of the product or service is not registered, but the purchase value is more than Rs. 50,000 then the invoice should necessarily carry the details mentioned below.
- Name and address of the recipient
- Delivery address
- Name and code of the state from where the product or service was purchased
In addition, if an invoice has already been generated, although changes need to be made in the taxable value, either a debit note or a credit note needs to be issued.
A debit note is issued in the case of an increase in the price of an already supplied item. It should be issued within 30 days of the price revision. Similarly, if the cost of the item is reduced, the supplier must issue a credit note needs to the recipient.
The government has laid down all the regulations explicitly to make the process easier for individuals and businesses. However, if the taxpayer is unclear, they can clarify their queries on the gst helpline.
GST was implemented to ensure transparency between the taxpayers and the authorities. Invoices play a crucial role in ensuring that, at least to some extent.
Invoices capture all the information necessary for the authorities to track debit and credit transactions. A compliant invoice has details about the item or service as well as its description and category.
Furthermore, a GST compliant invoice contains information regarding the seller and buyer, including the unique GST identification number of both the taxpayers as well as the place of purchase.
A GST compliant invoice may seem unnecessary, but it is beneficial for the market as a whole. The result of being transparent with this information is fair commercial practices that will benefit both consumers as well as merchants.