GST invoice vs Regular Invoice

Managing online orders can be considerably simpler when using Shopify. Invoicing, however, is an important matter.

A lot of Indian vendors have the same query "Do they require a GST invoice, or is a regular invoice sufficient?" It depends on the type of item you sell and your GST status.

A standard invoice primarily records a sale. Additionally, a GST tax invoice documents the GST information needed for a taxable supply. When submitting tax invoices, registered sellers are required to adhere to the relevant GST invoicing regulations.

This is where Shopify GST invoicing becomes crucial. Considering that Shopify is capable of managing orders and tax settings. However, sellers must still ensure that their invoices comply with the applicable GST regulations.

What Is a Regular Invoice?

A regular invoice is a type of document that contains details of a transaction. This may contain details like the name of the seller, items purchased, prices, quantity, and total amount. Details like mode of payment and delivery charges may also be included in a regular invoice.

Let us consider a case where there is an online store that sells handmade bags.

The customer purchases one handmade bag for ₹1,500, and the seller issues an invoice that includes the item purchased, price, delivery charges, and total. However, this cannot be considered a GST tax invoice.

This is because certain tax-related information is missing from the invoice.

What Is a GST Tax Invoice?

A GST tax invoice is generated when there is a requirement for its use in taxable transactions under GST regulations.

A GST tax invoice includes details about the seller, buyer (where required), goods or services, taxable value and applicable GST

The particulars contained in a tax invoice according to Rule 46 of the CGST Regulations are as follows:

These requirements come from the GST regulations. Regulations may vary over time. Therefore, sellers on Shopify must look up the current guidelines before making any changes to the invoice generation process.

GST Invoice vs Regular Invoice: What Is the Difference?

The following is a discussion of the GST invoices and the regular invoices that will help you understand about the invoices and, as a result, assist you in making decisions that are for your business.

Feature Regular Invoice GST Tax Invoice
Records a sale Yes Yes
Seller details Usually Required as applicable
GSTIN May not be shown Required for registered supplier
Invoice number Usually shown Must meet applicable GST rules
Taxable value May not be separate Shown where required
GST rate May not be shown Shown where applicable
GST amount May not be shown Shown where applicable
HSN or accounting code May not be shown Required as applicable
Place of supply May not be shown Required for relevant interstate supplies
GST compliance Not automatically compliant Must follow applicable GST rules

So, what does this actually mean for a Shopify vendor who is managing their business online?

A regular invoice mainly records the sale and shows what the customer purchased. A GST tax invoice goes a step further by showing the tax details required for that sale and can include the taxable value, GST rate, GST amount and other required details.

In simple terms, a regular invoice shows the sale. Whereas a GST tax invoice shows the sale along with the required GST information.

When Does a Shopify Seller Need a GST Invoice?

The invoice you require will be determined by the registration of your store within the GST scheme and the nature of transactions you are conducting.

Registered sellers making taxable supplies must follow the GST invoice rules that apply to each transaction.

If a seller makes exempt supplies, they generally need to issue a bill of supply instead of a GST tax invoice. The same applies in certain other situations under GST rules.

This explains why the seller should not use a single invoice form for all circumstances.

What If the Seller Is Not GST Registered?

The unregistered seller is unable to produce the GST tax invoice.

It is likely that some new sellers joining Shopify will commence their business activities even without registering for GST. It is possible that they will prepare sales invoices for their internal record-keeping purposes.

However, they should not consider themselves as registered vendors or collect GST in any case.

If you are in doubt regarding your GST registration, then you should talk to a tax professional today.

Does Shopify Generate Invoices?

It is one of the frequently asked questions of many sellers who have their Shopify stores.

Shopify offers order details as well as options for generating documents. However, Shopify claims that it does not issue a GST invoice by itself. Shopify advises using a local third-party GST invoice generator or app.

Therefore, does Shopify create invoices? It is possible to use the system to generate or print documents related to the order. But the order document is not necessarily an invoice.

It makes a difference.

The seller may find an invoice-like document in the Shopify process. But the seller must determine whether it contains the information necessary for the particular GST transaction.

What Is a Shopify GST Invoice?

A Shopify GST invoice is basically a GST invoice created for an order placed through Shopify.

The important part is not the word "Shopify." The important part is the tax information.

For example, a GST invoice for a Shopify order may need to show

The exact information depends on the transaction. The Shopify platform records the order and your invoicing process turns that order information into the required document.

A Practical Shopify GST Invoice Example

Consider an example:

Riya owns a clothing store through Shopify. This is a GST-registered business.

The customer residing in Gujarat purchases a taxable good from Riya’s store. This particular order from Shopify includes the product, customer details, payment details, and the total order value. Now, Riya needs an invoice with the GST implications in mind.

The invoice cannot contain only the following information:

Cotton shirt: ₹1,000

She requires the GST details along with the invoice as well.

The invoice must have the taxable value and GST details. It must include all the particulars of the invoice as well.

Now consider another example of an order from another state. The GST implications may vary in both cases, as this transaction is an inter-state transaction.

This is why Shopify sellers should check that their invoice format meets the requirements for their transactions instead of using the same format without checking.

GST Billing for Shopify: What Should Sellers Check

Good GST billing for Shopify starts with accurate store data. Before sending an invoice, check these points:

  1. Is the business GST registered?
  2. Is the GSTIN correct?
  3. Is the invoice number unique?
  4. Is the invoice date correct?
  5. Are product details correct?
  6. Is the HSN information correct where required?
  7. Is the taxable value correct?
  8. Is the GST amount correct?
  9. Is the place of supply shown where required?
  10. Does the final invoice match the Shopify order?

These checks are useful for small stores too. You do not need thousands of orders to face an invoice problem. One incorrect setup with the right application like Webplanex: GST Invoice India can affect your orders and business in a positive way.

Can a GST Invoicing App Help?

Yes, an invoicing application may simplify the process.

It can generate invoices based on Shopify order data. Depending on the software, it may also include invoice templates, tax fields, downloads and other invoicing features.

However, there is one significant point that an app does not take away your tax responsibility.

The vendor still needs to enter accurate company and tax information. The seller is also responsible for keeping the store's tax settings accurate.

For Shopify merchants who need a dedicated GST invoicing workflow, WebPlanex: GST Invoice India is one option to consider.

It's a GST invoicing application designed for Shopify merchants in India. Before using any app, check its current features. Check that they are appropriate for your business and billing requirements.

Key Takeaway

A normal invoice will often have details regarding the sale. Other than that, the GST tax invoice contains information regarding the GST tax that is necessary for that particular transaction based on your business.

Shopify does, in fact, aid with order management and tax settings. But it does not automatically provide GST-compliant invoices.

So, review your GST invoice Shopify process carefully and check your GSTIN, tax setup, product data, invoice numbering, and final invoice.

Shopify merchants who want an easier GST invoicing workflow can consider WebPlanex: GST Invoice India. Always check the current GST requirements at the official government site https://www.gst.gov.in/docadvisor/ that apply to your business.

Need An Easier Way To Manage GST Invoices For Your Shopify Store?

Then look no further. Connect with WebPlanex: GST Invoice India to explore invoicing solutions tailored to your business.

FAQ

Does Shopify automatically create GST invoices?

No. Shopify does not create a GST compliant bill. Sellers can utilize a local third-party GST invoicing service or app for this purpose.

Is a normal Shopify invoice enough for GST?

Not necessarily. A typical order invoice might lack necessary details related to GST. Make sure that the invoice is in compliance with the rules applicable to your business.

Is a GST invoicing app required by law?

The two concepts are distinct. While GST law imposes certain requirements concerning the generation of an invoice, it doesn’t imply the obligation of each Shopify merchant to make use of one specific application. The app is nothing but an additional tool that can help you manage the task.

Should I check GST rules before publishing my invoice?

Yes. GST rules can change. Check current guidance from official GST sources. If you are unclear about this rule and need guidance, then speak with a qualified tax professional.

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