E-invoicing in India witnessed a smooth implementation overall. However, certain aspects like handling freight, TCS, and discounts in e-invoicing can still be a concern for many. Especially now that the e-invoicing turnover limit has been reduced to small businesses. If you want to learn more about e-invoice implementation, click here: e-invoicing mandate.
In this article, we will touch upon the most common questions taxpayers have regarding handling Freight, TCS, and Discounts in E-invoicing.
How to calculate GST on Insurance Charges and Freight?
If the other charges like packaging, freight, insurance, etc. are taxable charges then the regular GST rates will be applicable to them. It is advisable to report these as separate line items so these values get considered taxable. Later on, there will be a revised schema for these values for better clarity and ease of reporting.
If you are charging tax on freight etc. and if it falls under composite supply, then you have to apply the principal place HSN and the rate you have to provide for freight. There won’t be any specific freight HSN since you are charging the tax rate of the product that is being sold and freight/insurance is on that particular product. So, as per the rules, you have to use the same HSN depending on what it is like for a composite supply. If it is a separate charge, then it needs to be shown as a separate line item.
What is TCS on Sales as per Finance Act 2020?
TCS on motor cars, scrap sales, services etc. has been a known concept. The Finance Act, 2020 has expanded the provision to include the sale of goods also under the purview of TCS.
Now many taxpayers are reporting this TCS amount in their invoices and also including the same in their invoice value. Currently, in the e-invoicing schema there is no specific field for TCS and hence as per FAQs provided by NIC, this value of TCS can be reported under Other Charges and in Invoice Remarks Field the same can be mentioned “TCS included in Other Charges”.
Who is liable to collect TCS under GST?
Certain operators who own, operate and manage e-commerce platforms are liable to collect TCS. TCS applies only if the operators collect consideration from the customers on behalf of vendors or suppliers. In other words, when the e-commerce operators pay the consideration collected to the vendors they have to deduct an amount as TCS and pay the net amount.
Here are a few exceptions to the TCS provisions for the services provided by an e-commerce platform:
- Hotel accommodation/clubs (unregistered suppliers)
- Transportation of passengers – radio taxi, motor cab or motorcycle
- Housekeeping services like plumbing, carpentry, etc. (unregistered suppliers)
Is TCS applicable to the sale of goods?
Yes, TCS is applicable from 1st October 2020 on a receipt basis.
In which cases is TCS not applicable?
- Goods are exported outside India or imported in India;
- Buyer is liable to deduct tax at source (TDS) on such goods;
- Buyer is Central Government, State Government, Embassy, High Commission, Legation, or trade representation of a foreign state;
- Buyer is a local authority as per section 10(20) of the Act;
- The goods are already covered under the existing provisions of TCS (e.g. alcoholic liquor, scrap, motor vehicles, etc.)
How to handle discounts in e-invoicing?
Discount management is essential for companies that come under the e-invoicing threshold. It is the practice of purchasers paying invoices in accordance with agreed-upon discounted rates. In version 1.1 of E-invoicing Schema (Released on 30th July 2020), the optional field of invoice level discount was added. So, the discount fields at the invoice level as well as the item level are already available in the official e-invoicing schema.
If the discount is given for any product level by the seller which is affecting the taxable value of that product, then these discounts need to be reported at the item level. And if any discount deal is given at the invoice level like a rebate or any kind of deduction from invoice values then that is treated as a discount at the invoice level.
You can use IRIS IRP to generate e-invoices for your business.
With IRIS IRP, you can prepare a single e-invoice via our tool or bulk generate IRN through the excel utility, pull IRN in your ERP via API Integration or custom print invoices using an awesome cloud platform!
If you are a small business owner (MSME/SME): IRIS IRP helps you to jumpstart your e-invoicing using the offline excel utility tool i.e. MS Excel interface. You can send Invoice Data to IRP in bulk and generate e-invoices real-time! Also, get to generate e-invoices and e-way bills on a single platform.
If you are a large business owner: IRIS GST E-invoicing is the best option for you - It is the fastest and easiest way to generate e-invoice. There are multiple options to generate IRN via IRIS E-invoicing. You can use APIs, and get a bulk upload facility or you can even go with SFTP or manual upload of invoices.
If you are a solution provider yourself: IRIS IRP calls all ERP providers and system integrators to design a seamless user journey for your customers using IRIS IRP to build a robust and error-proof e-invoice compliance. We offer Core and Enhanced APIs for e-invoice generation.