Boutique billing with GST: a plain-English guide

Whether you must register for GST depends mainly on your yearly turnover, the state you are in, and how you sell. Selling online through your own website or marketplaces can bring extra rules. Some small boutiques choose to register even when they do not have to, because business customers want a GST bill.

Ask your CA which applies to you. Once you are registered, you get a GSTIN, and every bill you issue needs to follow the GST rules.

Registered businesses generally fall into one of two schemes:

• Regular scheme: you charge GST on your bills, collect it from customers, and pay it to the government after claiming credit for GST you paid on purchases.
• Composition scheme: a simpler option for smaller businesses. You pay tax at a fixed rate on your turnover, but you cannot charge GST separately on your bills, and you issue a "bill of supply" instead of a tax invoice.

Which one suits you depends on your turnover, your customers and your purchases. This is a good question to discuss with your CA once a year.

A tax invoice under the regular scheme usually includes:

• Your boutique's name, address and GSTIN
• A unique invoice number in a continuous series, and the date
• The customer's name, and their GSTIN if they are a registered business
• A description of each item or service, with its HSN code (for goods) or SAC code (for services)
• Quantity and price of each item, and any discount
• The taxable value, the GST rate, and the tax amount
• CGST and SGST shown separately, or IGST, depending on where the customer is
• The total amount, and the place of supply

The basic idea is simple. When you sell to a customer in your own state, the tax is split into two equal parts: CGST (central) and SGST (state). When you sell to a customer in another state, for example when you ship an online order to a different state, the tax is charged as IGST (integrated) instead.

The total tax is usually the same; only the way it is split changes. Getting this right matters, because it affects which government receives the tax.

A boutique often sells two different things: goods (readymade suits, fabric, dupattas) and services (stitching, alterations, embroidery work on the customer's fabric). Goods use HSN codes and services use SAC codes, and the rates can be different.

For clothes, the GST rate can also depend on the type of item and its price. Rates have changed over the years, so do not rely on an old rate card. Ask your CA for the correct codes and rates for the main items you sell, and set them once in your billing system so every bill uses them correctly.

Advances

Boutiques take advances on almost every stitching order. Keep a clear record of each advance against the order and the customer, with the date and mode of payment. Your CA can tell you how advances should be treated for GST in your case.

Discounts

A discount given on the bill at the time of sale reduces the taxable value. Show it clearly on the bill before the tax is calculated.

Returns and exchanges

If a customer returns an item after a GST bill was issued, the usual way to adjust it is a credit note linked to the original invoice, not by editing or deleting the old bill.

Registered businesses file regular GST returns, usually monthly or quarterly depending on their size and scheme. Your CA will prepare them from your sales and purchase records. You can make that job faster and cheaper by keeping things tidy:

• Issue a bill for every sale, the same day.
• Keep all purchase bills from your suppliers, with their GSTIN.
• Separate sales by tax rate and by in-state and out-of-state.
• Note cash, UPI and card payments separately.
• Share one clean sales report with your CA each month, instead of a bag of bill books.

• Charging GST on bills when you are under the composition scheme.
• Using the wrong rate because of an old rate card.
• Charging CGST + SGST on an online order shipped to another state.
• Handwritten bills with missing GSTIN, HSN code or invoice number.
• Deleting a bill instead of issuing a credit note for a return.