GST INVOICE

GST INVOICE

GST INVOICE FORMAT

Goods and Services tax is a tax on domestic consumption. The tax is paid when money is spent on goods or services including imports. It is a multi-stage tax which is collected at every stage of the production and distribution chain.”Output Tax” is the GST charged on the local supplies of goods and services and  “Input Tax” is the GST charged on the local purchases of goods and services. The input tax is deductible from output tax to arrive at the GST payable by the trader, or amount to be refunded to him.

In Singapore GST will be levied on;

  1. Goods and services supplied in Singapore by a taxable person in the course of the business
  2. Goods imported into Singapore
  3. A supply is either taxable or exempt. A taxable supply is standard rated or zero rated. A standard rated supply is liable to a GST tax of 7%. Zero rated supply means GST is at 0%. In Singapore only exports of goods and international services are zero rated.
  4. If a supply is exempt from tax, no tax is chargeable on it. A GST registered trader does not charge his customer any GST on his exempt supplies.

INVOICING

Invoicing forms a crucial function when it comes to the execution of a transaction. The invoice is a basic document for recording the sale/purchase.

Tax Invoice

A tax invoice is the main document for supporting an input tax claim. A tax invoice is issued when the customer is GST registered. The customer needs to keep the tax invoice as supporting document to claim input tax. A tax invoice has to be issued within thirty days from the date of supply.

Only one tax invoice can be issued for a sale transaction. In any case if the tax invoice is lost, a duplicate copy marked as “copy” or “Duplicate” can be issued.

A tax invoice must not be issued if;

  1. You are not registered for GST
  2. You are selling goods under the Gross Margin Scheme
  3. You are the supplier under the self billing scheme

Tax invoice need not be issued for zero rated or exempt supplies or to a non- GST registered customer.

A tax invoice must have the following information

  1. The words “tax invoice” mentioned on it
  2. Customer’s name
  3. Customer’s address
  4. Supplier’s name
  5. Supplier’s address
  6. GST registration number
  7. Invoice number
  8. Date
  9. Description of the goods, Quantity, Unit price, Amount, Discount etc
  10. The gross amount payable for each supply also to be stated separately
  11. Any cash discount offered

There are three kinds of tax invoices;

  1. Buyer created tax invoices
  2. Tax invoices issued by agents
  3. Multiple supplies

In the first case i.e., the buyer created invoices, the person who receives the goods issues a tax invoice to the supplier. The conditions being that both the parties are GST registered, it has been agreed that only the recipient of goods will issue the invoice and he will keep a copy of the invoice.

In the second case “ Tax invoice issued by agents” Sometimes an agent purchases or sells goods and services on behalf of someone else, The principal is still the purchaser or seller, not the agent. If both the principal and agent are GST-registered persons, the agent may issue a tax invoice (or debit or credit note) on behalf of the principal. The tax invoice need only be issued in the name of the agent and there is no need for the agent to put the principal’s name on the tax invoice. The principal can’t issue a tax invoice for that same supply as well. If the agent receives the supply it is treated as though it’s made to the principal and not the agent. However, an agent can ask the supplier for a tax invoice as though the supply had been made to the agent. Agents must keep a record of the name, address and GST number of the principal in any transaction.

An employee can act as an agent for their employer. They may incur expenses on their employer’s behalf as part of the taxable activity. The employer can reimburse the employee and claim the GST credit. The tax invoice must show the name and address of the employee acting as agent for the employer.

Multiple Supplies

A tax invoice may contain details of more than one supply. Each supply must be mentioned separately but the GST can be mentioned as a single transaction.

The following amounts are to be shown separately in Singapore currency

  1. Total amount payable excluding tax
  2. Total tax chargeable
  3. Total amount payable including tax
  4. If applicable, the breakdown of exempt, zero – rated or other supplies, stating separately the gross amount payable.

Invoicing in a Foreign Currency

The following Items are to be converted in Singapore dollars and entered in the invoice;

  1. Total amount payable excluding GST
  2. Total amount payable including GST
  3. Total GST payable

Methods of calculating GST

There are two methods of calculating GST

  1. Add the GST amount for each line item or
  2. Add the total amount payable for all items (excluding GST) x 7%

The total GST payable on all goods and services shown in a tax invoice may be rounded off to the nearest whole cent. Whether a bill should be rounded up or down is a business decision and must be followed consistently.

The total GST computed may differ slightly due to rounding off but the chosen method must be used consistently.

A simplified tax invoice can be issued instead of a tax invoice if the total amount payable does not exceed $ 1000.

The following Information is required to be furnished in the invoice;

  1. Name, address and GST registration number
  2. Date of issue of invoice
  3. Invoice number
  4. Description of goods and services
  5. Total amount payable including GST
  6. The words “Price payable includes GST”

Invoice for an Exempt Supply

Supplies that are exempt from GST include:

  • The provision of financial services;
  • The sale and lease of residential properties; and
  • The import and local supply of investment precious metals

Invoicing Requirement for Exempt Supply

The invoice must include:

  • An identifying number
  • Date of issue of the invoice
  • Name, address and registration number of the supplier
  • Name and address of the customer
  • A description of the Investment Precious Metal supplied (see below)
  • Quantity of Investment Precious Metal supplied
  • Total amount payable

RECEIPT

Receipt can be issued instead of a tax invoice for a non registered GST customer. They stand as a proof for a transaction.

The following details must be printed on a receipt;

  1. Date of issue of the receipt
  2. Your business name and GST registration number
  3. The total amount payable (including the total amount of GST chargeable)
  4. The words “Price payable includes GST”

It is not mandatory to issue receipts but proper record of all business transactions need to be maintained. However receipts can still be issued to the customer if requested and tax invoices are required to be issued under GST regulations.

CREDIT NOTE

A credit note is issued to correct a mistake or to give credit to the customer. Following are the scenarios where credit notes are issued;

  1. To correct a genuine mistake
  2. Goods or Services not supplied
  3. Charges partly or fully waived
  4. Terms of contract not met
  5. Discount given
  6. The following details need to be furnished in the credit note;
  7. Serial number/Invoice number
  8. Date of issue
  9. Your name, address and GST registration number
  10. Your customer’s name and address
  11. Reason for the credit, e.g. “returned goods”
  12. Detailed Description to identify the goods and services that credit is allowed for
  13. Quantity and amount credited for each description
  14. Total amount credited, excluding tax
  15. Rate and amount of tax credited
  16. Total amount credited, including tax

The number and date of the original invoice also needs to be mentioned on the credit note.

With the consent of both the customer and the supplier, it can be agreed upon that the GST need not be adjusted in the credit note. The only condition being the customer is a fully taxable person without exempt supplies.

Self- Billing

It is an arrangement between a GST registered supplier and GST registered Customer,whereby the GST registered Customer prepares the tax invoice on behalf of the supplier and sends it to the supplier. In some industries e.g. publication industry, the business arrangement with customers is that the customers will determine and verify the final value of the goods delivered or the services rendered to them. Hence, it is more convenient for the customer, rather than the supplier, to issue the tax invoice. Some customers may also prefer self-billing as it facilitates their internal controls and accounting system given that their suppliers will be working with uniform purchase documentation

CONCLUSION

Tax invoices, receipts and credit notes are common documents issued when billing your customers.When a registered taxable person supplies taxable goods or services, a tax invoice is issued. To issue and receive a GST compliant invoice is a prerequisite to claim Input Tax Credit  . If a taxpayer does not issue such an invoice to his customer – who is a registered taxable person, his customer loses the Input Tax Credit  claim and the taxpayer loses its customers.

 

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