Goods and Services Tax (GST) came into effect in 2017 and since then it is mandatory for all the businesses in India to create GST-compliant invoices; both on paper and electronically. It is an integrated system of buyers and sellers, wherein one person’s supply must match another person’s purchase.
Issuing a proper GST invoice is of paramount importance for successful return filing. Therefore, in this article, we will tell you everything about the GST rate, GST invoice and how to raise GST-compliant invoices to consumers.
Before we get into technicalities, some basic concepts must be understood well.
Who should issue GST Invoice?
Every GST registered business needs to provide GST-complaint invoices to its customers for the sale of goods and/or services.
GST Rates
GST came into effect with a five-tier tax slab in order to demarcate the essential and luxury goods. The slab rates are as follows:
- NIL – No GST is imposed on commodities like sanitary napkins, colouring books and drawing books for children, salt, cereal grains like wheat, oats, etc.
- 5% – Imposed on items like biogas, natural cork, cashew nuts, kites, etc.
- 12% – Imposed on items like notebooks, ketchup, pickles, diagnostic kits, plastic beads, etc.
- 18% – Imposed on items like sports goods, aluminium foil, set up boxes for televisions, computer monitors (not exceeding 17 inches), headgears, power banks, etc.
- 28%. – Imposed on items like aerated waters containing added sugar, non-alcoholic beverages, cigars and other tobacco products, paints and varnishes, granite, perfumes, cosmetics, etc.
You can easily find the GST rates on various goods and services on the GST website. Below mentioned are steps to find the GST rates.
- Log on to the official page of Central Board of Indirect taxes and Customs i.e. https://cbic-gst.gov.in/index.html
- From the top menu bar, click on the “Service” From the drop-down, select “GST Rates”option.
- Once the page opens, you can use the search bar to find the GST rates of the required goods and services. You can also find the pdf file for the rates on the right-hand corner of the page.
Based on the GST tax rate, the business needs to prepare GST-compliant invoice. For every business having a valid GSTIN (GST identification number), an invoice must be issued by the supplier to its customers at the time of sale of goods or services. In order to claim Input Tax Credit and refunds, supplier must produce a valid invoice mentioning appropriate details.
What are the mandatory fields a GST Invoice should have?
- Name, address and GSTIN of the supplier.
- Tax invoice number and date (Tax invoice will have a unique number for a financial year).
- Buyer’s or recipient’s GSTIN, name and address, if he is registered. If the buyer or recipient is not registered and the value of taxable supply is more than Rs. 50,000 then the invoice should have the following details:
- Name and address of the recipient
- Address of the place where the goods or services are to be delivered
- State name and state code
- Details of the goods and services supplied in terms of description, quantity (number), unit (meter, kg, etc.) and the total value.
- The taxable value of the goods or services supplied after adjusting the discount, if any.
- HSN code of goods or Accounting Code of services.
- Applicable rate and amount of GST based on the transaction made i.e. CGST, IGST, SGST, UTGST and cess.
- Details of place of supply along with the name of the state, in case of inter-state trade or commerce.
- Details of the delivery address where the place of delivery is different from the place of supply.
- Clear mention on the invoice, if GST is to be paid on the reverse charge basis.
- Signature of the supplier or his authorized representative.
The supplier has to raise 3 copies of invoices at the time of supply of goods. The supplier will keep the original copy while the duplicate copies will be with the transporter and recipient of goods. In the case of supply of services, 2 copies will be issued; one for the supplier and other for the recipient.
What are the other types of invoices?
- Bill of Supply – Bill of supply is just like the GST invoice except that it does not contain any tax amount as the seller cannot charge GST to the buyer because the goods or services provided by the registered businesses are exempted or the registered person has opted for composition scheme.
- Consolidated Tax invoice – This type of invoice is issued when the value of goods or services supplied is less than Rs. 200. A consolidated tax invoice is also issued in situations where the registered person does not issue an invoice.
- Receipt Voucher – This type of invoice is issued when the GST registered supplier receives the value of goods or services in advance from the customers for future supply.
Apart from the above-mentioned scenarios, a proper invoice should be issued. Failure to raise a correct invoice is an offence and would attract penalties under the GST law
