Invoice (Bill) rules as per GST Law

Which details should be in Tax Invoice:

Sellers details
Seller Name
Address, Logo
GST Number
Mobile number

Buyers details
Buyers Name
Buyers Address with Pin code
Mobile number
GST Number if available

Other details like

Details of Item Sold or services provided
HSN Code column for goods or SAC code for services
Quantity of item sold
Quantity measure units like pcs/numbers/kg
Taxable Value (Total Value before Tax)
GST Rate and Tax Amount
Total Invoice Value (Final Value)
Invoice number and date
Vehicle number if goods transported through vehicle
Signature of supplier
Payment condition If any
If registered in MSME, then MSME Registration Number

Few Important points to be consider while issuing invoice:

1.If goods are delivered to some other place which is different from buyer address, then Invoice should contain details of ship to address, in which place & person details should be mentioned where goods are actually delivered.

2.Invoice Serial number should be unique in every financial year..every year from 1st April, Invoice number should be start with no. 1 along with prefix or suffix so that anyone after seeing Invoice, anyone may know that this invoice belongs to this financial year. Prefix or suffixe may be 2024-25 or 24-25 or etc.

3.Invoice should be issued when goods are sold or services are deliverered.

4. An exempted dealer who are dealing in GST exempted goods would not issue Tax Invoice, he will issue Bill of Supply.

5.Invoice should be consecutively serially numbered and it can be issued in multiple series.

6.Tax Invoice should be issued in 3 copies/triplicate.
First copy should be issued to buyer
Second copy should be for transporter who will deliver goods to customer place
Third copy would be with supplier
If there is no transporter then it must be issued in 2 copies.

Author

CA.Shobhit Kesharwani

Shobhit Kesharwani & Co

Tag: Bill of Supply, GST, Invoice, New Financial Year, Tax Invoice

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Shobhit Kesharwani & Co

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Tax Planning ideas to save Long Term Capital Gain tax on Sale of Long Term Equity Shares

Tax Planning in case of Long Term Capital Gain on Sale of Equity Shares:-

If an Investor holds Equity Shares for more than a year then capital gain on sale of those shares would be called Long Term Capital Gain and would be taxable @10%, and if these capital gain on sale of shares is up-to Rs.1 Lakhs then no tax need to be pay on this Rs.1 Lakh. So today we will understand how can we save tax on this long term capital gain on sale of long term equity shares:-

Tax Planning in case of Long Term Capital Gain on Sale of Equity Shares:-

If an Investor who has invested in Equity share/lump sum mutual fund over a long period of time and has unrealized Long term capital gains from holding long term equity shares then that Investor must have realized/book long term capital gain up-to Rs.1 Lakh in a year since capital gain on sale of long term equity shares is exempted up-to Rs.1 Lakh every year.

Investor may think why he should sale those equity shares which have gained a lot over a period and may give him high returns in future also, so here trick to save LTCG Tax is that after booking/realizing profit by selling holdings of those shares it can be bought back again after few minutes/hours/days, so by doing this you can save LTCG tax up-to Rs. 1 Lakh every year.

Understand this tax planning by this example:-

Suppose in FY 2023-24, you have shares which have gained a lot and giving you profit of Rs. 3 Lakhs & you are thinking to hold these shares till next year so if you sell these shares in next year in FY 2024-25 then you have to pay tax on Rs.2 Lakh since LTCG is exempted up-to Rs. 1 lakhs only so you have to pay tax @10% on balance Rs. 2 Lakhs. So Income Tax would be Rs.20,000.

So here if you do tax planning then you have to sell shares and realize/book profit of Rs. 1 Lakh in FY 2023-24 and in next year 2024-25 Rs. 1 lakhs and again in FY 2025-26, book another LTCG gain Rs.1 Lakhs. So accordingly Rs.3 Lakhs LTCG would be distributed in 3 years and there would be no tax liability on assessee.

This post is for educational purpose only.

Author

CA. Shobhit Kesharwani

Shobhit Kesharwani & Co

Tag: Equity Shares, Income Tax, LTCG on Sale of Shares, Tax Harvesting, Tax Planning

Section 43b(h) of Income Tax Act/MSME Rules Applicability from 1-4-2024, i.e. applicable for A.Y.2024-25 (FY 2023-24)

MSME 15/45 days payment rules applicability

Case-1

If a businessmen who is filing his Income Tax Return (ITR) u/s 44AD of Income Tax Act, 1961 and declaring presumptive profit @6% or 8% of his turnover as per the case, then the businessmen should not worry about this 15/45 days payment rule and he can make payment to his supplier even after 45 days as well and there would be no disallowances.

Case-2

If a businessmen who is not filing his ITR under section 44AD of Income Tax Act,1961 then he have to follow this MSME rules of 15/45 days payment. and he need to clear his dues within time. 45 days rule apply only when both parties have entered into agreement of payment term of 45 days or supplier have mentioned payment terms & condition on Invoices and in case of no agreement exist between both parties then 15 days rule would apply.

Conditions of payment

This MSME Rule would be applicable only if you have purchased goods/services from Manufacturer/Service Provider who have registered themself as MSME Micro & Small Enterprises. If you have purchased goods from a person who is registered as Traders in MSME, then this payment rule 15/45 days would not be applicable while payment to them.

Three Categories of businesses are defined in MSME on 01-07-2020, Micro Enterprises:-

If Turnover(Sales) is less than Rs.5 Crores and Investment in Plant & Machinary is upto Rs.1 Crore.

Small Enterprises:-

If Turnover(Sales) is less than Rs.50 Crores and Investment in Plant & Machinary is upto Rs.10 Crore.

Medium Enterprises:–

If Turnover(Sales) is less than Rs.250 Crores and Investment in Plant & Machinary is upto Rs.50 Crore.

Consequences of non payment within 15/45 days:-

As per Section 43b(h) of IT Act, 1961 if payment is not made within 15/45 days then it would be allowed as deduction in the year of payment only, means expenses of purchase of goods/services would be disallowed in the year it is incurred and would be allowed in the year of payment only.

Example-1

If Mr. A Purchased goods from a Manufacturer Mr. B( Micro MSME Registration holder) of Rs.5 Lakhs on 16-03-2024 and since no agreement exist between parties for payment then Mr. A have to make payment within 15 days i.e. within 31-03-2024, so if Mr. A failed to make payment within time and now makes payment on 10-04-2024 then in the Financial Year 2023-24, this Rs.5 Lakhs would be added to his Income and Mr. A would be liable to pay tax on this income as well.

Example-2

If Mr. A Purchased goods from a Manufacturer Mr. B( Micro Enterprises) of Rs.5 Lakhs on 16-03-2024 and Mr. A have to make payment within 15 days i.e. within 31-03-2024, so if Mr. A paid Rs.1 lakhs before 31-03-2024 and failed to make balance of Rs.4 Lakhs within 31-03-2024 and now on 10-04-2024 makes balance payment of Rs.4 Lakhs, then in the Financial Year 2023-24 this Rs.4 Lakhs would be added to his Income and Mr. A would be liable to pay tax on this additional income of Rs. 4 Lakhs as well.

How to Know whether a supplier is registered in MSME or not

You have to get confirmation from the supplier over email or through letter to know his status in MSME Registration. Contact all the suppliers/service providers whose balances are not paid and tell them to send their MSME Registration number or MSME Registration Certificate.

If some suppliers says that he has not registered on MSME, then still a written declaration is needed from them on email or letter mentioning that he has not registered on MSME.

Conclusion;-

Since this section is applicable for FY 2023-24, so everyone should calculate their outstanding balances of suppliers and should start making payment to Micro/Small Enterprises. Since reporting of this section is done by your Auditor, Chartered Accountants (CA) so you can not hide these transactions. their is no way to bypass this rule so every businessmen should do efforts to reduce their outsandings so that they can save Income Tax Liability.

This blog is written for educational purpose only.

Author

CA Shobhit Kesharwani

Shobhit Kesharwani & Co

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Shobhit Kesharwani & Co. Chartered Accountants is a experienced CA firm in India, led by skilled and experienced Indian Chartered Accountants having good knowledge & vast industry experience.

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