Learn how to authenticate GST bills and ways to quickly verify whether it is original invoice in GST compliance and avoid being deceived by businesses
The government of India introduced GST to simplify the existing indirect tax structure, but unfortunately, it also became an instrument for tax evasion by many. Widespread fraud under the guise of GST invoices can cause problems for small businesses and customers. Fraudsters could also use fake GST invoices to steal money from governments and customers who have paid taxes.
Lack of knowledge and understanding of GST regulations among buyers can result in fake or inaccurate GST invoices from store owners and businesses. In addition, many buyers do not pay sufficient attention to their vendor’s GSTIN number format, which creates favorable conditions for fraud.
GST invoices are often used to resolve disputes and claim income tax credits. However, customers can quickly verify whether the original invoice is original to avoid being deceived by stores and businesses in the name of a legitimate invoice. In this blog, we will discuss understanding the authenticity of GST bills and how you can verify them.
What is a GST Invoice?
An invoice for goods and services is issued to the buyer of goods and services by a supplier or seller. The invoice is a document which is used to identify the parties involved in the purchase of goods and services. It contains the product name, description, description and other details of goods/services purchaser/supplier details, date of purchase, discount, and so on.
What is a Counterfeit GST Invoice?
According to the Ministry of Finance Circular on Detecting Fake GST Invoices, a fake GST invoice is created even if there is no actual sale of goods or services or tax payment. Fake GST invoices can be made to evade taxes, convert ITC to cash, register fictitious purchases, and launder money.
Know How to Differentiate between Trading with Registered and Unregistered Sellers
There can be two types of suppliers: registered and unregistered. A registered business has a valid GSTIN number, while an unregistered business does not have a GSTIN number and does not operate under GST regulations.
A valid GST invoice issued by GST-registered vendors includes:
- A GSTIN number.
- Description of goods / services being supplied
- Name and address of Supplier and recipient
- The place of supply.
- A breakdown of the GST rate into CGST and SGST or IGST.
Not all taxpayers are required to register for GST, businesses with less than 20 lakh of turnover can choose not to take registration under GST.
Unregistered businesses may charge GST and do not remit it to the government, so tracking GST registration is critical. Ensure the company’s GSTIN is accurate by checking it on the government’s GST portal.
How do you recognize a fake GST invoice?
One of the easiest ways to spot a fake GST bill is to understand the basic structure of the 15-digit GSTIN number that the vendor/retailer/store owner receives.
The state code is represented by the first two digits of the GSTIN. The next ten digits are the vendor or supplier number PAN and the last 3 digits are random alphanumeric digits. Any discrepancy in the GSTIN format can help identify anomalies in the GST invoice.
The business or the individual must be registered to charge GST
A taxpayer can only claim GST from their supplier if they are registered. Here is the list of persons who must register for GST:
- Any person or business whose total turnover exceeds INR 20 lakhs (INR 10 lakhs in case of a particular category state).
- Any company or individual dealing in inter-state supply.
- E-commerce operators.
- Any other company or person as required by the GST law.
In addition, any person who does not fall into the above category may voluntarily register for GST.
The invoice should mention GSTIN.
The GSTIN is an exclusive identification number assigned to each taxpayer registered under the GST. As per the GST law, an electronic invoice must have a valid GSTIN, which helps the taxpayer to apply for ITC easily.
A structured GSTIN
The GSTIN is a 15-digit alphanumeric code assigned to each taxpayer.
- The first two characters stand for an assigned and unique state code.
- The following ten characters represent the permanent account number of a company (PAN).
- The 13th character represents a company’s number of units in a given state.
- The last or 14th character remains constant, Z.
- The 15th character will be an irregular numeral. This may be a letter or a number for internal control by GST authorities.
A Valid GSTIN on the Invoice
Visit the GST Portal to check if a GSTIN is valid on an invoice.
- On the GST portal, go to the search page
- Type the GSTIN stated on the invoice
- Click the search button
In case the GSTIN is legal, it will show the following particulars:
- The legal name of the business
- GST registration date
- Sate and Center Authority
- Type of Business or taxpayer
- GSTIN or UIN status
Exact GST Rates
The taxpayer may charge the wrong GST rates. The retailer must sort the item correctly, or the person mistakenly divided CGST and SGST.
In such cases, the taxpayer must visit the GST website to check the tax rates for goods or/and services. This way, you can check whether the goods and services supplied are exempt from GST.
Fake Invoice system analysis
Invoice issued without supply of goods or services is considered as a fake invoice, so ensure the following to safeguard ones business from the menace of fake invoicing:
- Ensure that the GSTIN of supplier is correct
- Invoice must mention correct details and addresses of despatch and delivery
- E-way bill must also have all details correctly mentioned.
- Documents establishing the fact that the goods were indeed sent from the place mentioned in the invoice to the place also mentioned in the invoice must be there.
- The truck or other means of conveyance used for delivery must be genuine
- Electronic proof of delivery like CCTV footage must be saved.
- Payments must be made within the time prescribed in GST law through genuine banking means.
The Final Note
Today, GST is a reality, and it is levied almost everywhere. But there are serious deceptions all over the country. As a result, companies are ripping a hole in customers’ pockets. By having fake GST numbers printed, business owners have trapped customers. Therefore, customers should understand the law much better. Consequently, they should be aware of their purchases and beware of possible scams.
It is high time that such scams are eradicated from the system. Customers should not fall for all charges levied by shopkeepers in the name of GST. They should quickly scan the number and ask questions to the owner. The authorities should be informed about the fraud. Fraudsters should be punished for deceiving customers.