Uninterrupted and seamless chain of input tax credit (hereinafter referred to as, (ITC") is one of the key features of Goods and Services Tax. ITC is a mechanism to avoid cascading of taxes. Cascading of taxes, in simple language is 'tax on tax' Under the present system of taxation, credit of taxes being levied by Central Government is not available as set-off for payment of taxes levied by State Government, and Vice Versa.
One of the most important features of the GST system is that the entire supply chain would be subject to GST to be levied by Central and state Government concurrently. As the tax charged by the Central or the State Governments would be part of the same tax regime, the credit of tax paid at every stage would be available as set-off for payment of tax at every subsequent stage.
Under this new system, most of the indirect taxes levied by Central and the State Governments on supply of goods or services or both, would be combined together under a single levy.
(a) Central Goods and Services Tax (CGST) on intra-state supply of goods or services or both.
(b) State Goods and Services Tax (SGST) on inter-state supply of goods or services or both.
(c) Integrated Goods and Services Tax (IGST) on inter--state supply of goods or services or both. In case of import of goods also, the present levy of Countervailing Duty (CVD)and Special Additional Duty (SAD) would be replaced by IGST.
Protocol to avail and utilize the Credit of these taxes is as following
Credit of to be utilized first for payment of Balance can be utilized for payment of
CGST CGST IGST
SGST SGST IGST
IGST IGST CGST Then SGST
Conditions for claiming ITC
(a) Taxpayer should possess tax invoice or debit note or any other tax paying documents issued by supplier registered under the GST Act.
(b) He should have received the goods or services or both.
(c) Supplier should have reported the supply in the returns and should have paid tax.
ITC not allowed in the following circumstances
(a) ITC not allowed for a Composition dealer.
(b) ITC not allowed for goods or services received by a nonresident taxable person except on goods imported by him.
(c) ITC not allowed for goods or services used for personal consumption
(d) ITC not allowed for Goods lost/stolen/destroyed/returned or disposed of by way of gift/free samples.
Time limit for claiming ITC
ITC for a supply received in a financial year has to be claimed any time before the filing of returns for the month of September (of the following financial year) or the relevant annual return whichever is earlier.
TAX INVOICE
Issue of Invoice for supply of goods When movement of goods is involved, tax invoice has to be issued before or at the time of removal of the goods.
When movement of goods is not involved, tax invoice has to be issued before or at the time of delivery of goods to the recipient or when the goods ae made available to the recipient.
Issue of Invoice for Supply of services
In case of supply of services, tax invoice has to be issued within 30 days of supply of services. In case of banking, insurance and other finance companies, invoice has to be raised 45 days of supply of services.
Issue of invoice by an unregistered person
Only a registered person can issue a tax invoice. GST law specifically prohibits collection of tax by persons who are not registered under the GST law.
Revised Invoice
The words 'Revised' invoices' or 'Supplementary invoice' should be mentioned prominently in such invoices along with reference of the date and invoice number of the original invoice
Bill of supply
A Bill of supply is a document issued instead of a tax invoice. Bill of supply is issued for the following supplies
(a) Supply of exempted goods or services, or
(b) Supply made by a composition taxpayer
For all sales of exempted goods made for a value more than Rs.200- and for all sales made by a composition supplier for a value more than Rs. 200/- Bill of supply has to be issued. if the sales value is less than Rs. 200/- Bill of supply need not be issued unless the recipient demands for such a bill. At the end of the day, a consolidated Bill of supply should be prepared for all sales made for a value of less than Rs. 200/-
For issuing credit note, an invoice for a supply should have been issued earlier. A credit note may be issued in the following circumstances
(a) The taxable value on which the tax collected is more than the actual taxable value
(b) The tax charged is more than what should have been charged
(c) The recipient has returned the goods
A debit note may be issued in the following circumstances
(a) The taxable value on which the tax collected is less than the actual taxable value
(b) The tax charged is less than what should have been charged
Copies of Invoices
For supply of goods the invoice should be prepared in triplicate.
(a) The original copy being marked as "ORIGINAL FOR RECIPIENT"
(b) The duplicate copy being marked as "DUPLICATE FOR TRANSPORTER"
(c) The triplicate copy being marked as "TRIPLICATE FOR SUPPLIER"
For supply of services the invoice should be prepared in duplicate.
(a) The original copy being marked as "ORIGINAL FOR RECIPIENT"
(b) The duplicate copy being marked as "DUPLICATE FOR SUPPLIER"
Document for Reverse charge
Where tax is to be collected on reverse charge basis, the recipient of goods or services has to issue a 'payment voucher' at the time of making payment to the supplier. The dealer is also required to issue tax invoice mentioning that the tax has been collected on reverse charge basis.
Contents of an Invoice
A tax invoice should contain the following details.
(1) Name, address and GSTIN of the supplier
(2) Consecutive serial number containing alphabets or numbers or special characters hyphen (-) or slash (/) for a financial year.
(3) Date of issue
(4) Name, address and GSTIN or UIN of the recipient, if the recipient is a registered dealer.
(5) Name and address of the recipient if the invoice value is mor than Rs. 50000/-
(6) HSN Code of goods or Accounting Code of services
(7) Description of goods or services
(8) Quantity in case of goods and unit or unique Quantity code thereof
(9) Total value of supply of goods of services or both
(10) Taxable value of supply of goods or services or both taking into account discount or abatement, if any
(11) Rate of tax separately for each type of tax (Central tax, State tax, Integrated tax or cess)
(12) Amount of tax charged (Central tax, State tax & Intergrated tax or cess
(13) If the supply is in the course of inter-state trade or commerce, place of supply along with the name of state.
(14) Address of delivery, where the same is different from the place of supply
(15) Whether tax is payable on reverse charge basis
(16) Signature or digital signature of the supplier or his authorized representative
Bill of supply should contain the following details
(1) Name, address and GSTIN of the supplier
(2) consecutive serial number containing alphabets or numerals or special characters hyphen (-) or slash (/) for a financial year.
(3) Date of issue
(4) Neme, address and GSTIN or UIN of the recipient, if the recipient is a registered dealer.
(5) HSN code of goods or Accounting Code of services
(6) Description of goods or services
(7) signature or digital signature of the supplier or his authorized representative.
