GST has brought several issues for the taxpayers in form of changed bill formats and higher tax burden. Businesses are still unable to understand the details that need to be put in the invoice.
While some businesses are committing the mistakes unintentionally, others have taken this transition as an opportunity to charge taxes and hike the prices of products.
As a result, there have been numerous instances reported on social media and to the government officials where the customers have received improper bills. Let’s discuss how a customer can spot whether the bill is fake or genuine and if the shopkeeper supplying the bill is competent enough to charge GST or not.
Business not registered under GST but still charging GST
Following businesses are required to get themselves registered under GST –
1. If the business was registered under VAT/ service tax,
2. Aggregate turnover is more than 20 lakh rupees (10 lakh rupees for special category states),
3. There is inter-state supply of goods or services,
4. Business is an e-commerce operator.
Any business not covered by above conditions may apply for GST voluntarily.
In any case, if the business isn’t registered under GST, it can’t charge GST from the customers.
So, if GST isn’t mentioned on invoice, customers shouldn’t pay GST on the invoice amount.
VAT/ Service Tax mentioned on the invoice instead of GSTIN Number
Businesses can’t mention Tax Identification Number (TIN) or Service Tax Registration Number on their invoices since VAT and service tax has been subsumed under GST. If any business charges CGST and SGST or IGST in the invoices that contains TIN number or service tax registration number, it is invalid practice.
GSTIN number should be mentioned in invoice if the business charges GST from the customers.
Whether structure of GST is correct
GSTIN number is a 15-digit registration number which is unique for every taxpayer. First two characters of GSTIN number represent the state code. Each state has been assigned a unique code.
Next 10 characters will be the PAN number of the business (PAN number of shop owner in case of proprietorship firm, and PAN number of organization in other cases).
The 13th character will be number of entities of the same PAN holder in a particular state. If PAN holder operates only one entity in a particular state, 13th character will be “1”.
The 14th character will always be Z.
The 15th character will be a random digit which may be an alphabet or a number for internal check by GST officials.
GST provisional number mentioned on invoice
Taxpayers who have migrated themselves from VAT to GST were issued GST provisional numbers initially. Even if final GSTIN number hasn’t been allotted to the taxpayer, they can charge GST on basis of mentioning provisional GSTIN number because it will be the final GSTIN number as well.
Checking whether GSTIN number is valid or not
Whether the GSTIN number mentioned on the invoice is valid or not can be checked by visiting GST portal. For this –
If GSTIN number is valid, screen will show details of taxpayer –
GST isn’t charged at correct rates
It may so happen that shopkeeper has charged GST at incorrect rates. Either he may not have categorised the product correctly, or may have made a mistake in bifurcation of total GST in CGST and SGST.
In such case, official website of GST can be visited for checking rates on goods and services. Also, from there, all those goods and services which are exempt from GST can be checked. Mobile app “GST rate finder”, an official application issued by GST council, can also be used to check GST rates.
Composition dealers can’t charge GST
Taxpayers registered as composition suppliers can’t charge GST from customers. They have to issue non – tax invoice (called ‘bill of supply’) and have to specifically mentioned in invoice that they are composition dealers and aren’t charging any GST from customers.
Although prima facie bill may look genuine, but upon observing the information, it can be checked whether the bill is genuine and if the shopkeeper is rightly charging GST or not.
Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application Avalara TrustFile GST can help you with GST compliance automation, contact us through https://www.avalara.com/in/products/gst-returns-filing.