Understanding India’s GST and how to send GST invoices
In 2017, India’s tax system underwent a significant transformation, as a huge range of indirect taxes were subsumed by a new broad Goods and Services Tax (GST). Here’s everything you need to know about the GST bill and what it means for invoicing and e-invoicing in India.
What is GST?
India’s Goods and Services Tax (GST) is an indirect tax which has replaced over 10 other specific taxes including excise duties, VAT, and sales taxes. As its name suggests, GST is levied on the transaction of a goods and services. It came into effect on 1st July 2017 and was designed to simplify the Indian tax system, bringing consistency to tax collection across all the Indian states.
GST is a multistage tax, meaning it’s due at every point of sale from the purchase of raw materials to the final sale of goods to consumers. The GST system is made up of three component taxes:
- CGST – Collected by the Central Government on intra-state sales
- SGST – Collected by the state government on intra-state sales
- IGST – Collected by the Central Government on inter-state sales
Effects of the GST’s introduction have included a removal of the cascading effect of previous taxes, a simplified user interface, and much simpler compliance rules.
Naturally, GST had an impact on the way B2B invoices work. As a GST registered business, there are several key things you need to know about how to make your invoices GST-compliant, whether they’re electronic or not.
The first is what mandatory fields you need to include on all GST invoices. According to India’s Central Board of Indirect Taxes & Customs, these are:
- Name, address, and GSTIN (a unique 15-digit identification number as a GST-registered business) of the supplier
- Date of issue
- Name address and GSTIN (or UIN) of the recipient
- HSN code of goods or accounting code of services
- Description of goods or services
- Quantity of goods or services
- Total value of goods or services
- Taxable value of goods or services, taking discounts into account
- Rate of tax (at state and central government levels)
- Amount of tax charged
- Place of supply (including the name of the state in inter-state trade)
- Signature or digital signature
Secondly, you need to be aware of the defined time limits outlined by the GST bill for invoice issuance. These time limits vary depending on the nature of the transaction, and are summarized below:
- Goods (normal case) – On or before date of delivery
- Goods (continuous supply) – On or before date of issue of account statement
- Services (normal case) – Within 30 days of delivery of services
- Services (banks and NBFCs) – Within 45 days of delivery of services
Outside of these specific requirements, GST invoices are largely like any other invoice you’ll be used to.
Using Taulia for GST-compliant einvoicing
Taulia, the leading provider of financing for supply chain networks, launched compliant Indian tax invoicing in Q1 2018. The new service for India is available alongside the other 50+ compliant countries supported by Taulia and the additional 60+ countries where Taulia assists buyers and suppliers to capture and exchange invoice data.
Taulia offers invoicing and archiving services in India in compliance with mandated in-country processes, and in collaboration with our partner Trustweaver. Taulia’s solution supports all Indian business-to-business invoices and goods and services invoices, in line with Goods and Services (GST) tax in-country reforms consisting of the nationwide uptake of CGST, SGST, IGST and UTGST for corporate indirect tax payments. Taulia’s solution provisions for both domestic and cross-border invoicing and is now available to all buyers and suppliers in our financial network.
India operates a ‘post-audit’ invoicing model, which means that the invoice is audited by the Tax Authority after it has been issued by the taxpayer (supplier) and delivered to the buyer – the audit can take place anytime within 8 years according to the GST Archiving Act. The solution operates a PDF advanced electronic signature to ensure data integrity and authenticity of the parties. In addition, mandated in-country commercial and tax features have been incorporated to capture required trading elements for both domestic and cross-border exchanges.
Taulia’s invoicing service in India meets the demands of our largest clients and partners, many of which are continuously expanding their business activity in India and the APAC region. Most large corporates are making costs efficiencies by vigorously automating their invoice issuance and delivery processes to benefit from end-to-end automation as well as ensuring compliance with in-country regulation. Taulia’s India invoicing service is now available to all corporate clients that are already using Taulia’s network to connect and exchange compliant invoices with millions of their suppliers throughout their supply chains in India and globally.
Contact us today to learn more about using Taulia for invoicing and more in India.