What is GST Bill and How to Generate
GST bill- Quite literally, GST (Goods and Services Tax) is a tax levied when a consumer buys a good or service.
The current tax regime is riddled with indirect taxes which the GST aims to subsume with a single comprehensive tax, bringing it all under a single umbrella. The bill aims to eliminate the cascading effect of taxes on production and distribution prices on goods and services.
Cascading effect of taxes is caused due to levy of different charges by state and union governments separately. In the current multi-staged tax-structure, the following taxes are levied by the centre and state separately:
Taxes levied by the Centre include: Income tax, service tax, central sales tax, excise duty and security transaction tax.
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
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What is a GST Invoice
An invoice or a bill is a list of goods sent or services provided, along with the amount due for payment.
If you are a GST registered business, you need to provide GST-complaint invoices to your clients for sale of good and/or services.
Your GST registered vendors will provide GST-compliant purchase invoices to you.
What are the mandatory fields a GST Invoice should have?
A tax invoice is generally issued to charge the tax and pass on the input tax credit. A GST Invoice must have the following mandatory fields:
- Invoice number and date
- Customer name
- Shipping and billing address
- Customer and taxpayer’s GSTIN (if registered)
- Place of supply
- HSN code/ SAC code
- Item details i.e. description, quantity (number), unit (meter, kg etc.), total value
- Taxable value and discounts
- Rate and amount of taxes i.e. CGST/ SGST/ IGST
- Whether GST is payable on reverse charge basis
- Signature of the supplier
How is GST applied
GST is a consumption based tax. It is based on the “Destination principle.” GST is applied on goods and services at the place where final/actual consumption happens.
GST is collected on value-added goods and services at each stage of sale or purchase in the supply chain. GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services.The manufacturer or wholesaler or retailer will pay the applicable GST rate but will claim back through tax credit mechanism.
Benefits of GST Bill implementation
The tax structure will be made lean and simple
The entire Indian market will be a unified market which may translate into lower business costs. It can facilitate seamless movement of goods across states and reduce the transaction costs of businesses.
It is good for export oriented businesses. Because it is not applied for goods/services which are exported out of India.
In the long run, the lower tax burden could translate into lower prices on goods for consumers.
The Suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumers.
It can bring more transparency and better compliance.
Number of departments will reduce which in turn may lead to less corruption
More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.