Gst Invoice Compliance

---
name: gst-invoice-compliance
description: >
  Help Indian freelancers, small businesses, and startups understand and handle GST, invoicing, and
  basic tax compliance. Use when the user needs to create a GST-compliant invoice, understand GST
  rates or applicability, figure out whether they need to register for GST, understand input tax
  credit, deal with TDS, or grasp filing basics (GSTR-1, GSTR-3B). Triggers on "make me a GST
  invoice", "do I need GST registration", "what GST rate applies to my service", "how does input
  tax credit work", "TDS on my consulting income", "difference between CGST SGST IGST", or "invoice
  format for freelancer". Built for Indian tax rules. Not a substitute for a CA on complex matters.
---

# GST & Invoice Compliance Skill

Help Indian freelancers and small businesses handle GST and invoicing correctly. India's GST rules
confuse millions of small business owners, and mistakes cost real money (denied input credit,
penalties, notices). This skill explains the rules in plain language and generates compliant invoices.

**For complex situations (multi-state operations, exports, disputes), always recommend a Chartered
Accountant. This skill handles the common cases the majority of small businesses face.**

---

## Core concepts (explain simply when asked)

**What is GST:** A single indirect tax on supply of goods and services, replacing the old maze of
VAT/service tax/excise.

**The three types:**
- **CGST + SGST** - when buyer and seller are in the SAME state (tax splits between centre and state)
- **IGST** - when buyer and seller are in DIFFERENT states (single integrated tax)

Simple rule: same state → CGST+SGST; different state → IGST. Total rate is the same either way; it's
just how it's split.

**Input Tax Credit (ITC):** You can deduct the GST you paid on business purchases from the GST you
collect on sales. You only pay the difference to the government. This is why being GST-registered can
actually save money for B2B businesses.

---

## GST registration - do they need it?

Walk through this logic:

| Situation | Registration needed? |
|---|---|
| Service turnover under Rs 20 lakh/year (most states) | Not mandatory |
| Goods turnover under Rs 40 lakh/year (most states) | Not mandatory |
| Special category states (NE, hilly) - lower thresholds | Threshold is Rs 10-20 lakh |
| Selling inter-state (goods) | Mandatory regardless of turnover |
| Selling on e-commerce (Amazon, Flipkart etc.) | Usually mandatory |
| Exporting services/goods | Registration beneficial (zero-rated, claim refunds) |
| Voluntary (to claim ITC or look established) | Optional but allowed |

Note: Even below threshold, some freelancers register voluntarily because B2B clients prefer GST
invoices (they can claim ITC). Weigh this for the user.

---

## Creating a compliant tax invoice

A GST invoice MUST contain (see scripts/invoice-generator.py to produce one):

Required fields:
1. Word "Tax Invoice" / "Invoice"
2. Invoice number (consecutive, unique) and date
3. Supplier name, address, GSTIN
4. Recipient name, address, GSTIN (if registered)
5. Place of supply (state) - determines CGST+SGST vs IGST
6. HSN code (goods) or SAC code (services)
7. Description, quantity, rate, taxable value
8. GST rate and amount (split into CGST/SGST or IGST)
9. Total invoice value (in figures and words)
10. Whether tax is on reverse charge basis
11. Signature / digital signature

For freelancers/consultants, the SAC code matters. Common ones:
- IT/software services: 9983 / 998314
- Consulting/professional: 9983 / 998311
- Content/design: 9983
- Marketing services: 998361

---

## Common GST rates

| Category | Typical rate |
|---|---|
| Most services (professional, consulting, IT) | 18% |
| Most goods | 12% or 18% |
| Essential goods | 0% or 5% |
| Luxury/sin goods | 28% |
| Restaurant (non-AC/small) | 5% |

Always confirm the current rate for the specific HSN/SAC - GST rates get revised at council meetings.
When unsure, tell the user to verify the current rate for their specific code.

---

## TDS (for service providers)

If a business client pays you for professional/technical services, they often deduct TDS (Tax
Deducted at Source) before paying you:
- Professional/technical services: typically 10% under Section 194J
- Contractor payments: 1-2% under Section 194C
- This TDS is NOT an extra tax - it's advance tax on your income. You claim credit for it when
  filing your income tax return (it shows in your Form 26AS / AIS).

Don't confuse TDS (income tax) with GST (indirect tax). They're separate. On a consulting invoice,
you charge GST on top; the client deducts TDS from the base amount. Explain this clearly - it's a
frequent source of confusion.

Example on a Rs 1,00,000 consulting fee:
```
Base fee:            Rs 1,00,000
+ GST @ 18%:         Rs   18,000
= Invoice total:     Rs 1,18,000
- TDS @ 10% (on base): Rs 10,000   (deducted by client, you claim it back)
= Amount you receive:  Rs 1,08,000
(You still owe the Rs 18,000 GST to the govt; you got it from the client)
```

---

## Filing basics (explain when asked, don't overwhelm)

- **GSTR-1:** Details of outward supplies (your sales). Monthly or quarterly.
- **GSTR-3B:** Summary return + tax payment. Monthly (or quarterly under QRMP).
- **Annual return (GSTR-9):** For turnover above threshold.
- **Composition scheme:** Simplified option for small businesses (turnover under Rs 1.5 cr) - flat
  low rate, but can't claim ITC and can't do inter-state sales.

For actual filing, recommend a CA or a platform (ClearTax, Zoho Books) unless the user is confident.

---

## Hard rules

- Never guarantee a specific GST rate is current - rates change at GST Council meetings. Tell the
  user to verify the rate for their exact HSN/SAC code.
- Distinguish clearly between GST (indirect) and TDS/income tax (direct) - the confusion is constant.
- For exports, multi-state, or disputes, recommend a CA.
- Never help structure fake invoices, circular billing, or ITC fraud.

---

## Reference files

- `scripts/invoice-generator.py` - Generates a GST-compliant invoice PDF from simple inputs