GST in Computerised Accounting — Invoice, Input Tax Credit and Reports

How the software handles GST

Once a business is registered under GST and its GSTIN is entered in the company setup, accounting software handles GST almost automatically: it applies the correct rate to each item, splits it into CGST/SGST or IGST from the buyer's state, prints a proper tax invoice, and builds the reports needed to file returns.

The GST (tax) invoice

A GST invoice (tax invoice) is the document a registered seller must issue for a taxable supply. It is the basis on which the buyer can claim input tax credit, so the law requires it to contain certain particulars. A typical GST invoice shows:

• the supplier's name, address and GSTIN;
• a unique invoice number and the date;
• the buyer's name, address and GSTIN (for a registered buyer);
• a description of the goods/services, with the HSN/SAC code, quantity, and rate;
• the taxable value (value before tax), after any discount;
• the GST rate and amount, shown as CGST and SGST (intra-state) or IGST (inter-state);
• the total invoice value (taxable value + GST);
• the supplier's signature (or digital signature).

Accounting software produces this invoice automatically from a sales voucher, filling in the tax split and totals.

Input Tax Credit (ITC)

Input tax credit is the heart of GST. A registered business pays GST when it buys goods/services (this is its input tax) and collects GST when it sells (its output tax). ITC lets the business set the input tax off against the output tax, and pay the government only the difference. This prevents tax on tax (cascading), so tax is effectively borne only on the value added.

Net GST payable = Output tax (on sales) - Input tax credit (on purchases).

Worked example. A trader buys goods for Rs 50,000 and later sells them for Rs 70,000, both intra-state at 18% GST.

Net GST payable = Output - Input = CGST (6,300 - 4,500 = 1,800) + SGST (6,300 - 4,500 = 1,800) = Rs 3,600.

Check: value added = 70,000 - 50,000 = 20,000; 18% of 20,000 = Rs 3,600 — the same answer, confirming that GST is really paid only on the value added. The software tracks input and output tax in separate ledgers and computes this net figure automatically.

GST reports and returns

From the tax recorded on every voucher, the software prepares GST reports that summarise the tax collected and paid and help file GST returns (the periodic statements every registered business must submit). Commonly produced reports include: …