GST: Invoice, rules & formats

GST Explained

GST or the Goods and Service Tax was one of the recent amendments to the Indian economy. The concept behind GST is to accumulate indirect taxes under one branch. Introduced in the year 2017, the GST council has segregated 1300 goods and 500 services under four tax slabs of 5%, 12%, 18%, and 28% under GST. Besides these four slabs, the government has also kept GST on gold at 3% and rough precious and semi-precious stones at 0.25%.

Further, the Indian Government divided GST into four branches:

1. CGST (Central GST): The first part of the transaction that is of the Central is known as CGST.
   
2. SGST (State GST): The transaction that takes place under an individual state is known as SGST.
   
3. IGST (Integrated GST): When transactions occur between two states/UTs or between foreign territories and states or UTs, IGST is levied over GST.
   
4. UGST (Union Territory GST): UGST is when transactions take place in the Union Territories.

GST Registration

GST was introduced in the country to carry the vision for globalisation. With its introduction, GST made its way to the digital channels to provide the users with GST registration, thereby, making paying GST online possible.

Besides introducing reformed ways for filing of taxes, the Indian Government also introduced a GST site to initiate a smoother experience at GST registration online.

Steps of GST registration:

Step 1: Visit the GST registration portal.

Step 2: Once you reach the page, click on the ‘Registration’ tab and begin with the process of your new GST registration.

Step 3: Generate your OTP verification and TRN generation, followed by the login procedure.

Step 4: Fill the basic information about your business and submit the information to generate ARN that is followed by final level verification.

Once done, you are entitled to GST filing.

When should you create a GST invoice?

You are entitled to create a GST invoice if you have a GSTIN registration where it is mandatory for businesses to provide their customers with a GST invoice. On the other hand, you are also entitled to receive a proper GST invoice if you are purchasing products from a GSTIN registered supplier.

Now, before we understand the different formats of calculating GST, let’s have a look at the necessary contents of the invoice format:

1. Invoice number and date it is issued
2. Customer’s name
3. Billing and Shipping address
4. GSTIN registration number of supplier and customer
5. Supply details (Address of supply, HSN code, SAC code)
6. Details of items issued
7. Total value (After-tax deductions)
8. Signature of the supplier

Interestingly, besides Excel, there are several other GST softwares that help you out in the creation of such invoices.

Rules of a GST invoice

It is no hidden fact that a GST registered business is only entitled to print a GST invoice. The businesses that fall under different taxation rules and are not entitled to issue GST compliant invoices. Under the circumstances where the businesses fall under different taxation rules, such entities can offer alternatives to GST invoices.
Explained below are a set of Do’s and Don’ts to comply with the GST bill rules:

Understanding the important GSTRs for common businesses

GSTR 2:

The GSTR 2 is a monthly format of tax returns that one can apply over all the purchases they have made in a month. It is a great move by the Government to initiate a purchase from registered vendors. Individual customers can easily comply with their sales returns that are available in the GSTN portal as GSTR-2A and amend to the necessary changes and add relevant details in their generated GST invoice.

GSTR 4:

The GSTR 4 is a type of input tax that needs to be paid by the composition dealer. The GSTR 4 enables the business entities to pay their dues, once a year, unlike the normal taxpayers who need to submit their dues every three months.

GSTR 7:

The Goods and Services Tax Return 7 is documentation filed by taxpayers who deduce their taxes while making payments to vendors/suppliers in return of the inward supplies received. To file this GSTR,  the document must contain the details of those transactions where the TDS is present, along with the complete details of your suppliers.

GSTR 9:

Talking of the GSTR 9, this format of tax is payable by the registered taxpayers in an annual format. The GST bill under this format contains a descriptive summary of outward supply and taxes paid. Further, GSTR 9 also comprises all the input tax credits that were claimed beside the taxes paid and refunds claimed for that year.
Suppose you are an individual business entity or a single person who wants to calculate their GST return. In that case, you could also be Calculating GST, post the process of your new GST registration.

The standard formula for calculating GST is given as below:

However, you could also make use of the online calculators that are present over the internet.

Also read:
Goods & Services Tax: The Ultimate FAQ Guide
GST: Types of GST in detail

FAQs

Q. Can I revise my invoice before I register for GST?

A. Yes, it is totally legal and possible to amend changes to your invoice before registering it for GST. However, you need to submit your revised invoice within a month of the submission of your actual GST bill.

Q. I have a grocery shop, what type of GSTR should I go for?

A. If you have a small scale grocery, you can go for GSTR 9 but in case you have a large scale grocery chain or shops, you should go for GSTR 7 as it comes with various deductions in hand.

Q. How do I register for GST?

A. You can follow the steps listed above to see the steps on how to register yourself for GST. However, you can always reach us in case you find any trouble in registering for the same.

Q. Under which tax slab does the GST on real estate come?

A. The GST on real estate comes under the 12% tax slab.

Q. What are the exempted goods under GST?

A. The list of exempted items under GST is long and basically comprises all the edible fruits and vegetables, milk and several dairy products as well. It also comprises the apparels under the 500 mark.