A. GST Invoice
What is e Invoicing? What is the need of e-invoicing?
- E – invoicing or electronic invoicing is a process of validating invoices electronically through GST Network( GSTN) for further use on common GST portal. It does not mean generation of invoices from a central portal of tax department
- The e- invoicing mechanism only specifies the invoice standard( Schema).
- At present, there are hundreds of accounting software which generate invoices but they use their own formats to store information electronically and data on such invoices can’t be understood by the GST System,if reported in their respective formats. Fresh entry need to be done every time for reporting details to GST system as part of Return.
- Adoption of a standard will ensure interoperability of the data The most important point here is that the invoice must have mandatory parameters and must conform to the e-invoice standard( schema) published in GST common portal.(https://www.gstn.org/e-invoice/.)
How to Report e- invoice to a central system
- Invoice Registration portal( IRP) of GST will check from Central Registry of GST system to ensure that same invoice from same supplier pertaining to same financial year is not being uploaded again.
- On receipt of confirmation, it will generate a unique Invoice Reference Number( IRN) and digitally sign the invoice and also generate a QR Code. Portal will return the same to the taxpayer who generated the document. The IRP will also send the signed e invoice to the recipient of the document.
- E invoice data would be used by GST system for generation of e way bill( Part 1) and updating ANX-1 of the seller and ANX-2 of the buyer.
- The QR code will contain viral parameters of the invoice ie GSTN of seller, buyer invoice no., invoice date, number of line items, HSN of major commodities. Invoice Reference
What are the Benefits of implementation of e- invoicing system
- One time reporting of B2B invoice data by the supplier. It will reduce reporting in multiple formats(GSTR-1/ E-way bill ).
- E-invoicing can be further used for creating e-way bills by providing only vehicle details.
- Substantial reduction in input credit verification issues as same data will get reported to tax department as well to buyer.
- It will facilitate automatic preparation of GST Returns(ANX 1 and ANX 2
- Complete trail of B2B invoices will be available
- Invoices uploaded by suppliers for authentication will be automatically shared with buyers for reconciliation.
- The system will auto-match input credit liability with output tax. E-invoice can be created for Debit/Credit Notes, Invoices and other eligible documents.
- E-invoice can be created for Debit/Credit Notes, Invoices and other eligible documents.
B . E-way bill
What is E-way bill? Who must generate e-way bill
- EWay Bill is an Electronic Way bill for movement of goods to be generated on the eWay Bill Portal. All you need is a Portal login
- A GST registered person cannot transport goods in a vehicle whose value exceeds Rs. 50,000 (Single Invoice/bill/delivery challan aggregate of all Invoices in a vehicle/ Conveyance)) without an e-way bill that is generated on ewaybillgst.gov.in
For certain specified Goods, the eway bill needs to be generated mandatorily even if the Value of the consignment of Goods is less than Rs. 50,000:
- Inter-State movement of Goods by the Principal to the Job-worker by Principal/ registered Job-worker
- Inter-State Transport of Handicraft goods by a dealer exempted from GST registration
- Alternatively, Eway bill can also be generated or cancelled through SMS, Android App and by site-to-site integration through API. When an eway bill is generated, a unique Eway Bill Number (EBN) is allocated and is available to the supplier, recipient, and the transporter.
Who bears the onus of preparing E-Way Bill ???
Who must prepare e way bill
When to prepare
Every Registered person under GST
Before movement of goods
Form GST EWB-01
Registered person is
Before movement of goods
Form GST EWB-01
Registered person is consignor or consignee and goods are handed over to transporter of goods
Before movement of goods
The registered person shall furnish the information relating to the transporter in Part B of FORM GST EWB-01
Transporter of goods
Before movement of goods
Generate e-way bill on basis of information shared by the registered person in Part A of FORM GST EWB-01
An unregistered person under GST and recipient is registered
Compliance to be done by Recipient as if he is the Supplier.
Part B of FORM GST EWB-01.
C . Input Tax Credit
Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount.
When you buy a product/service from a registered dealer you pay taxes on the purchase. On selling, you collect the tax. You adjust the taxes paid at the time of purchase with the amount of output tax (tax on sales) and balance liability of tax (tax on sales minus tax on purchase) has to be paid to the government. This mechanism is called utilization of input tax credit.
For example- you are a manufacturer:
- Tax payable on output (FINAL PRODUCT) is Rs 1000
- Tax paid on input (PURCHASES) is Rs 300 c. You can claim INPUT CREDIT of Rs 300
- You need to deposit Rs 700 in taxes.
What are the conditions to claim ITC?
ITC can be claimed by a person registered under GST only if he fulfills ALL the conditions as prescribed.
- The dealer should be in possession of tax invoice
- The said goods/services have been received
- Returns have been filed.
- The tax charged has been paid to the government by the supplier.
- When goods are received in installments ITC can be claimed only when the last lot is received.
- No ITC will be allowed if depreciation has been claimed on tax component of a capital good
How to claim ITC
All regular taxpayers must report the amount of input tax credit(ITC) in their monthly GST returns of Form GSTR-3B. The table 4 requires the summary figure of eligible ITC, Ineligible ITC and ITC reversed during the tax period. The format of the Table 4 is given below:
(A) ITC Available (Whether in full or part)
(1) Import of goods
(2) Import of services
(3) Inward supplies liable to reverse charge(other than 1 & 2 above)
(4) Inward supplies from ISD
(5) All other ITC
(B) ITC Reversed
(1) As per rules 42 & 43 of CGST Rules
(C) Net ITC Available(A) - (B)
(D) Ineligible ITC
(1) As per section 17(5)
Yes. The definition of input tax includes the tax payable under reverse charge. The credit can be availed if such goods and/or services are used, or are intended to be used, in the course or furtherance of his business.
Yes, it may be noted that credit of tax paid on capital goods also is permitted to be availed in one installment.
He shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act. It may be noted that the credit on pre-registration stock would not be admissible if the registration has not been obtained within a period of 30 days from the date on which he becomes liable to registration.
A person becomes liable to pay tax on 1st August, 2017 and has obtained registration on 15th August, 2017. Such person is eligible for input tax credit on inputs held in stock as on 31st July, 2017.
The person who obtains voluntary registration is entitled to take the input tax credit of input tax on inputs in stock, inputs in semi-finished goods and finished goods in stock, held on the day immediately preceding the date of registration.
The input tax credit of goods and / service attributable to only taxable supplies can be taken by the registered taxable person. The amount of eligible credit would be calculated in a manner to be prescribed under GST law and rules. It is important to note that credit on capital goods also would now be permitted on a proportionate basis.
The input tax credit for goods and / service attributable to only supplies effected for business purpose can be taken by the registered taxable person. The amount of eligible credit would be calculated in a manner to be prescribed under GST Law and rules. It is important to note that credit on capital goods also would now be permitted on a proportionate basis.
The transferor shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to the transferee provided that there is a specific provision for transfer of liabilities.
The registered taxable person, who was paying tax under section 7 opts to pay tax under Compounding Scheme under Section 10, has to pay an amount equivalent to the input tax credit in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over.
It has also been provided that after payment of the amount on such goods, the balance if any available in electronic credit ledger would lapse.
The dealer can avail ITC in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under section 7.
Yes, the principal is eligible to avail the input tax credit on inputs sent to job worker for job work.
The time period for this is 180 days. The principal has to reverse the credit along with interest on inputs which have not been received back from job worker within 180 days but he can reclaim the credit on receipt of inputs.
In this case, Zero-rated supplies are included for the calculation.
The time period for this is two years.
Bill of entry
Invoice issued under reverse charge mechanism
Document issued by the ISD
The principal has to pay an amount equal to credit taken on such capital goods along with interest. But he can reclaim the credit on receipt of inputs.
ITC on motor vehicles can be availed only if the taxable person is in the business of transport of passengers or goods or is providing the services of imparting training on motor vehicles.
The input tax credit shall not be allowed on the said tax component which is depreciated.
As per GST Law, following four conditions are stipulated:
(a) The registered taxable person should be in possession of tax paying document issued by a supplier;
(b) The taxable person must have received the goods and / services;
(c) The tax charged on such supply has been actually paid to the government either in cash or through utilization of input tax credit; and
(d) The taxable person should have furnished the return
The registered taxable person shall be entitled to the credit upon receipt of the last lot or installment.
For this purpose of receiving the goods, it would be deemed that the taxable person has received the goods when the goods have been delivered to a third party in the direction of such taxable person. So ITC will be available to the person on whose order the goods are delivered to the third person.
ITC cannot be taken beyond the month of September of the following FY to which invoice pertains or date of filing of an annual return, whichever is earlier.
The underlying reasoning for this restriction is that no change in return is permitted after September of next FY. If annual return is filed before the month of September then no change can be made after filing of an annual return.
It has been provided that the ITC on following items cannot be availed:
(a) motor vehicles, except when they are supplied in the usual course of business or are used for providing the following taxable services—
(i) transportation of passengers, or
(ii) transportation of goods, or
(iii) imparting training on motor driving skills;
(b) goods and / or services provided in relation to food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness center, life insurance, health insurance and travel benefits extended to employees on vacation such as leave or home travel concession, when such goods and/ or services are used primarily for personal use or consumption of any employee;
(c) goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery;
(d) goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery;
(e) goods and/or services on which tax has been paid under section 8; and
(f) goods and/or services used for private or personal consumption, to the extent they are so consumed.
In case of the mismatch between the inward and outward details, the supplier would be required to rectify the mismatch within a period of two months and if the mismatch continues, the ITC would have to be reversed by the recipient.
In case of supply of capital goods on which input tax credit has been taken, the registered taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be specified in this behalf or the tax on the transaction value of such capital goods, whichever is higher.
The wrongly availed credit would be recovered from the registered taxable person under section 73 and 74 of CGST Act.