Reverse Charge GST Invoice Format

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Reverse Charge GST Invoice Format

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The Goods and Service Tax (GST) a new taxation
system in India, has replaced many of the
existing indirect taxes. The complicated GST
invoice format of the asset-based tax system is
now eliminated under GST, a destination-based tax
system. It has replaced several indirect taxes
that include, Taxes, VAT, CVD (Counter Veiling
Duty), Excise Duty, Entry Tax, SAD, Purchase Tax,
etc. The Central Government of India has so far
enacted four types of GST Invoice format, namely,
CGST, IGST, UTGST, and bills of compensating
states that are implemented in the whole
nation. The well-structured GST regime has
eliminated the cascading effects and double
taxation, along with facilitating the smooth
functionalities of business operations. Since its
inception, Indias GST tax regime has
increasingly registered growth and government
revenue, affecting both the manufacturing and
service sectors. However, India is a country that
has regulated, partially regulated, and
unregulated sectors that are continuously
monitored. To counter these issues, the
government has introduced the Reverse Charge
Mechanism (RCM).
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RCM strives to improve compliance procedures and
tax coverage. Previously, the reverse charge
concept was only meant for service taxes and
applied to services sold and not for goods.
Later, under the GST Act, the government notified
specific goods and services on which reverse
charge GST is applicable. In this article, you
will learn more about RCM, rules, Self-invoicing,
RCM GST invoice format, RCM GST tax invoice
software, and other necessary fields of reverse
charge mechanism.
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What is Reverse Charge Mechanism Under GST?

• Usually, under GST, the supplier is liable to
  collect tax on the goods and services offered.
  The reverse charge mechanism is a new concept
  introduced by the central government. The
  recipient is eligible for the Input Tax Credit on
  the product or the service received on behalf of
  an unregistered minor supplier. The RCM GST
  system aims to expand the base of taxes acquired
  in the nation. It also strives to provide
  compensation for the states loss of revenue.
• Any person obligated to pay the tax on reverse
  charges must adhere to specific provisions such
  as threshold exemption, time of supply, and input
  tax credit changes. There is a minimum total
  turnover of RS 20,00,000 required to register as
  regular taxpayers, but there is no such limit in
  the case of reverse charges. A person must be
  registered under GST regardless of the total
  limit.

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• Reverse Charge Mechanism under GST is applicable
  under the following circumstances
• It is applicable when an unregistered supplier
  supplies goods or services to a registered
  dealer.
• It applies to the services provided by an
  e-commerce operator.
• It is also applicable to the supply of services
  and goods specified by the CBIC.

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Specified Rules Under RCM

• Rule 1
• Businesses or individuals who are liable to pay
  taxes under RCM must register themselves as a
  certified taxpayer even though the annual
  turnover is below the minimum tax pay limit.
• Rule 2
• The tax application under RCM must be submitted
  to the government on the 20th of every month.
• Rule 3
• The recipient liable to pay RCM can avail of the
  credits of ITC if the business or individual is
  registered under the reverse charge mechanism GST.

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• Rule 4
• Taxpayers registered under RCM are required to
  present the manually updated invoice or payment
  voucher details to avail of the tax credits or
  advantages if the crucial information in an
  auto-populated invoice is absent.
• Rule 5
• Taxpayers can avail of tax credits under RCM even
  in case of advance payments.
• Rule 6
• Enterprises with an annual turnover of lesser
  than ten crores can be omitted under RCM.
• Rule 7
• Under RCM, a recipient can avail of tax credits
  only on the supplies issued by a business or a
  company.

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Self Invoicing Under RCM Self-invoicing or
billing is done when a registered taxpayer
purchases goods or services subjected to RCM from
an unregistered vendor. Self-invoicing is crucial
as the supplier cannot issue a GST compliant
invoice to the buyer. Therefore, the recipient is
responsible for paying taxes on behalf of the
vendor.
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Payment Voucher Format or GST Invoice Format
Under RCM The payment voucher or invoice under
RCM acts as proof of payment under GST. It is the
evidence of the transaction carried out between a
taxpayer and an unregistered supplier. Thus, the
recipients responsibility is to create invoices
or produce proof of payment/payment voucher on
the goods or services received. Accordingly, a
payment voucher or the RCM invoice format under
GST is issued upon the payment of the supplies
delivered. Under CGST Act 2017, Section 31 (3)
(g), a registered recipient must issue a payment
voucher/RCM invoice to the supplier while making
payments for goods or services on which reverse
charges are applicable. A payment voucher/GST
invoice format under RCM should include essential
details as specified by the CBIC.
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• Necessary Fields of Payment Voucher/GST Invoice
  Format Under RCM
• Name and address of the goods and services
  provider.
• A consecutive serial number that does not exceed
  16 characters. The combination must be unique
  from that of other fiscal year combinations.
• The date on which payment voucher or RCM invoice
  is issued.
• Name, address, and GSTIN number of the recipient.
• Description of goods and services on which
  reverse charge tax is paid under GST.
• The total payment processed to the supplier.
• Rate and amount of tax charged under different
  clauses CGST, SGST / UTGST, IGST, and cess.
• The place of supply, state name, and code for
  transactions carried out on interstate supply of
  goods or services.
• Digital or manual signature of the supplier or an
  authorized representative of the supplier.

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• RCM GST Invoice Software Features
• Although certain small businesses have determined
  chartered accountants to manage financial
  accounting operations, it is vital to implement
  RCM billing and invoicing software. It simplifies
  the whole process that helps streamline other
  business operations effectively. Here are some of
  the significant features that you must look for
  in the RCM GST accounting software.
• The robust technology of ERP helps eradicate the
  manual errors that occur while filing and
  formatting the invoices.
• Your RCM GST invoice generator must be compatible
  and updated as per the central government
  guidelines of e-invoicing.
• The GST invoicing software simplifies the
  procedures of GST returns filing.
• The cloud-based GST billing software offers data
  privacy and security that are significant to
  manage finances and accounting details.
• An ideal software enables businesses to handle
  complex tasks such as GST tax calculations, tax
  rates, deductions, timely returns filing,
  formatting necessary invoice details, etc.

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Conclusion

• The GST tax regime in India has been in practice
  for almost a decade now. However, the ongoing
  COVID-19 economic crisis has stirred confusion
  due to several changes in the nations taxation
  policies, GST rules, and regulations. The changes
  in tax calculation aim to ease the burden of
  taxpayers alongside increasing the tax revenue
  generation. The simple solution amid the tough
  time for both government and the taxpayers is the
  e-invoicing/business software solutions.
• The core value of accounting software strives to
  solve the problems concerning GST invoice format
  and bills. It is the one-step solution to all
  misinterpretations and manual errors of invoice
  computation. Imprezz is one such business
  intelligence software that helps create GST
  invoices, manage inventory, purchase orders,
  track purchases, and file returns directly on the
  GST portal in just a few clicks. It is the
  pioneer of small business accounting software in
  India that is trusted by thousands of accounting
  experts nationwide.
• We offer a 14 days free trial software
  program for CAs, freelancers, solopreneurs, and
  small businesses in India. Login in less than 2
  minutes to get started right away!

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