Hordes of business owners and traders seem to be finding it difficult to comprehend the concept of the Goods and Services Tax (GST) and its machinery. GST in India brought into the picture to nullify the double tax or cascading effect of several indirect taxes, including VAT, Entertainment, Excise, Sales, and so on. The Goods and Services Tax is a single unified tax that the customer is liable to pay on taxable goods and services.
What is a GST Invoice?
A supplier of goods or services issues a GST invoice to show that the delivery of the goods or services in question is complete. It displays the names of the entities involved in the transaction and their corresponding details. Here’s what a GST invoice generally contains:
- Name of service or product
- The quantity of the goods or for how long the services were provided
- The specifics of the supplier and buyer
- The date on which goods or services were supplied
- Terms of supply
- Prices of goods or services
- Any applicable discounts
The supplier may utilize the GST invoice as a payment request from the buyer. Once the amount is paid, the GST invoice serves as evidence for the purchaser, proving the transaction’s authenticity. In a scenario where an individual registered under the GST purchases an item from an individual who is not registered under the GST, the purchaser will be required to have a payment voucher and a GST invoice ready for the supply of the goods or service to happen.
There are several types of GST invoices that you may issue entirely depending on the nature of the business you are dealing with.
Why do you need to issue a GST Invoice?
If you are registered under the GST, you need to issue a GST invoice once the supply of goods or services is made unless the value of the supply amounts to less than Rs. 200.
Evidence of Supply
Firstly, the GST invoice serves as a legal document that proves the legitimacy of the supply of the products or services in question. The supplier can use the GST invoice to request a payment from the purchaser. Once the payment is made, the purchaser can use the GST invoice as evidence of ownership.
Time of Supply
Considering how the GST is typically imposed after the supply of goods or services, the GST invoice records the exact time and date of the transaction. This simplifies the process of recording the GST payment to be made. The Goods and Services Tax is generally imposed during the supply of goods or services or when the GST invoice is issued, depending on whichever happens first.
Input Tax Credit
The Input Tax Credit (ITC) mechanism under the Goods and Services Tax is one of the most noteworthy features of the goods and services tax. As a supplier, you are allowed to use the GST invoice to claim your ITC legally.
Issuing Types of GST Invoices Based on Time of Supply of Goods or Services
The following show some of the types of GST invoices you can issue depending on the time of supply of goods or services:
The provider of goods or services issues this invoice to the buyer. The invoice clearly displays the names of the individuals involved in the transaction, as well as the supply details like supply date, GST invoice number, billing and shipping addresses, supply location, purchaser’s GSTN, description of products and services, and so forth. You need to know the GST invoice format in excel.
Bill of Supply
A business that either supplies tax-exempt goods or services or is registered under the GST composition scheme may issue a bill of supply.
As per the CGST Act, 2017, businesses that make supplies of goods and services that are tax-exempt under GST or pay taxes under the composition scheme under GST need to issue a bill of supply and not a tax invoice. If you are new to the GST world and GST invoices, this should give you everything you need to start.