Know The Difference Between Tax Invoices And Bill Of Supply- Nature And Area Of Use
Goods and Service Tax has turned the tables of the whole Taxation system. Today GST is the only indirect tax for the entire nation. Various reforms are introduced under the GST regime and one of them is the change in invoice requirements.
Prior to its inauguration in the nation, under the previous indirect tax system, one has to generate various tax invoices or commercial invoices for most sales. As per GST laws, the person has to create a tax invoice or a bill of supply only.
Below is the introduction of these two integrals of the recent indirect tax system:
The tax invoice is basically the invoice or the bill of sale issued by a seller to a buyer. Trades or businesses registered in the records of GST should issue a tax invoice for every sale.
According to the legislation, the trades or businesses with the gross sales of more than Rs 10 Lakhs per annum in northern states and more than Rs 20 Lakhs per annum for the other parts of the country have to enroll for the GST. If your trade has turnover less than the requisite but you still wish to claim input credit (to reduce your tax liability), even you can register under GST.
Firms registered under GST must generate invoices including the recipient’s name, buyers details (if not same as the recipient), serial number generated based on the tax year, value or amount of goods or services, HSN code, Service accounting code, other relevant codes, state code on supplies outside state, state code on bill amount above 50,000.
Providing all the above details in the invoice is a must for every seller, apart from that, one must timely issue invoices. It is the prime responsibility of the seller to issue the invoice of the goods or services sold to the buyer containing all the valid details.
In case if the goods are produced on the customer’s site, the invoice will be issued to the customer after the goods are prepared and ready to use. In addition to including these details, you also need to issue your invoices in a timely manner.
Typically, on every supply of goods invoice must be generated and issued to the customer. If you’re transporting goods, the invoice needs to be issued when the goods reach the seller or earlier. For goods manufactured on your customer’s site, you don’t need to issue the invoice until the goods are available for your client to use.
In the case of the supply of services, one must generate the invoices up to 30 days from providing the service. For banks and other financial bodies, it's 45 days.
BILL OF SUPPLY
The major difference between the tax invoice and bill of supply is that the tax amount is not printed on the bill of supply, which means tax is not charged on the bill of supply.
If you are selling goods or services which are exempted from any kind of taxes you must issue the bill of supply to the buyer. Businesses registered under composition scheme (scheme under GST for small taxpayers whose annual income is less than 1 Crore and pay GST at the fixed rate of annual turnover) should use this form.
Under the 'composition scheme' seller pays fixed GST on a quarterly basis and doesn't collect GST from the buyers and therefore does not fill the tax invoice. For example, a business unit under a composition scheme is paying a 3% sales tax on overall income instead of stressing on the exact GST tax slab for each product they manufacture.
For composition dealers it is necessary to include in the bill:
Name of the seller, address and GST identification number
Date of which the supply was issued
Name and address of the buyer.
Serial number based on the tax year
HSN code and SAC code of the sold commodity
Value or amount of the supply.
Owner’s or representative’s signature.
Both forms have almost similar information but are valid in different situations. Before selling the goods or services to the customer make sure you issue the correct invoice to the customer.
Gen GST billing software is a complete invoicing & billing tool for the taxpayers and entities registered under the goods and services tax regime. The Gen GST helps in complete maintenance of invoice data, sales & purchase, dr & cr balance and invoicing compliance format as per government.