Imagine you’re running your small business in India, and you receive a GST bill from one of your vendors.
You’re excited because it means you can claim an input tax credit (ITC) and reduce your tax liability.
But wait—how do you know if the bill is authentic? What if it’s fake or incorrect?
You don’t want to end up in trouble with the GST department, right?
This is exactly why we are bringing this topic to the forefront. As an accounting automation platform, Suvit helps businesses streamline their tax compliance, including GST.
But we also know how vital it is for businesses to stay informed. So today, we’re going to guide you through how to check if a GST bill is authentic.
Let’s make sure you never get caught off guard by a fake or inaccurate bill.
Why It’s Important to Check GST Bill Authenticity
GST fraud is a growing problem in India. Fake GST bills can lead to penalties, loss of input tax credit, and even legal issues. Sometimes, vendors might issue GST bills with incorrect details, and you might end up claiming ITC that’s not valid. This can backfire during audits or scrutiny by tax authorities.
So, how do you protect your business? The first step is learning how to verify the authenticity of a GST bill before claiming an input tax credit.
How to Make Sure Your GST Bill is Authentic
There are simple steps you can take to ensure that a GST bill is legitimate.
Let’s break it down:
1. Verify the GSTIN of the Supplier
The GST Identification Number (GSTIN) is a 15-digit code assigned to registered businesses. Every GST bill should have a GSTIN mentioned. To verify this:
- Visit the GST portal and use the “Search Taxpayer” tool.
- Enter the GSTIN found on the bill.
- Ensure the details match the supplier’s name, address, and registration status.
If the details don't match, that’s a red flag. You might be dealing with a fake GST bill. Verifying the GSTIN on the portal is the easiest and fastest way to confirm the legitimacy of the supplier.
2. Confirm Proper Invoice Format
A genuine GST bill must follow a specific format as per GST laws. Key elements to check include:
- Supplier's name, address, and GSTIN.
- Your name, address, and GSTIN (if registered).
- Date of issue and invoice number.
- Detailed description of goods or services provided.
- Quantity, price, and total amount.
- Breakup of tax amounts (CGST, SGST, or IGST).
- HSN or SAC codes of the goods or services.
An invoice missing any of these elements is non-compliant and could lead to issues later on. If your bill doesn’t follow the correct format, it’s a clear sign something’s wrong.
3. Verify HSN or SAC Codes
HSN (Harmonized System of Nomenclature) codes and SAC (Services Accounting Codes) classify goods and services under GST. Every item or service on a GST bill should be accompanied by its relevant HSN or SAC code. You can verify these codes on the GST portal or with an accountant.
An incorrect or missing HSN or SAC code could point to a fake or invalid GST bill. So, ensure the codes align with the products or services listed.
Also Read: GST Invoice Management Options
4. Review Tax Rates and Breakup
GST is charged at different rates based on the type of goods or services. Look at the bill and check the tax rates applied. For example, if the item is a luxury good, a 28% tax should be charged. For essentials, it’s usually 5% or 12%.
If the tax rates seem off, or if they don’t match the GST rate applicable to the product, this is another indicator that the bill might be incorrect or fake.
5. Check the QR Code on the Bill
Nowadays, many GST bills come with a QR code that can be scanned to verify the bill’s authenticity. You can use your smartphone to scan the QR code, which should pull up all the relevant details from the GST portal. If the details match, the bill is authentic. If not, you should be cautious.
The QR code system was introduced to make it easier to spot fake GST bills. So if you receive a bill without one, especially from a registered business, it’s worth double-checking.
6. Check Filing Status of Supplier
Every GST-registered supplier must file regular returns (GSTR-1, GSTR-3B, etc.). If a supplier hasn’t filed their returns, their GSTIN might be suspended or canceled. You can check the supplier's return filing status on the GST portal using their GSTIN.
If the supplier hasn’t filed their returns, it could mean they aren’t actively complying with GST regulations, and your bill may not be legitimate.
7. Invoice Reference Number (IRN) and QR Code
When it comes to verifying a GST bill, the Invoice Reference Number (IRN) is just as important as the QR code. The IRN is a unique number generated when an e-invoice is uploaded to the Invoice Registration Portal (IRP). Essentially, it’s proof that the invoice has been registered with the GST system.
So, what should you do?
- Check if the IRN is present on the bill.
- Match it with the QR code to verify that the invoice details are consistent.
If your bill doesn’t have an IRN (and it’s from a business required to generate e-invoices), that’s a red flag. An invoice without this number could be fake or non-compliant. For added peace of mind, scanning the QR code should bring up the invoice details, including the IRN. This simple check can save you from future troubles with tax authorities.
8. Matching with GSTR-2A/2B
To ensure everything is in line with GST regulations, you need to cross-check the invoice with your GSTR-2A or GSTR-2B. These are forms provided by the GST portal that summarize the input tax credit (ITC) available to you.
Here’s how to do it:
- Log in to the GST portal and access your GSTR-2A or GSTR-2B.
- Check whether the invoice issued by your supplier appears in these forms.
- If the details match, you’re good to go. If not, you’ll need to clarify the issue with the supplier before claiming ITC.
Why is this important?
Sometimes suppliers fail to file their returns, which means their invoices might not reflect in your GSTR-2A/2B forms. If you claim ITC on such invoices, it can lead to penalties during an audit. So, always take a moment to cross-check this information before filing.
Possible Consequences of Using Fake or Incorrect GST Bills
Claiming ITC based on fake or incorrect GST bills can have serious consequences:
- Penalties: You may face hefty penalties for claiming input tax credit using fake bills.
- Loss of Input Tax Credit: If the GST bill is found to be fake during an audit, you’ll lose the ITC you claimed.
- Legal Trouble: In extreme cases, businesses have faced legal action for using fake GST bills.
This is why it’s so important to double-check every GST bill you receive. A little caution now can save you from bigger headaches down the road.
How Suvit Helps Businesses Stay GST-Compliant
Suvit simplifies GST compliance for businesses in India. Our platform helps you automate data entry & GST reconciliation, manage documents, and track GST filing statuses, ensuring you’re always on top of your compliance game. With Suvit, you can also verify GSTINs and track GST returns, so you don’t have to worry about fake bills slipping through the cracks.
By using Suvit’s tool, you ensure that your business remains compliant and protected from potential GST fraud. We make tax compliance easy, accurate, and stress-free.
Also Read: Self-Assessment under GST: How to Ensure Compliance and Avoid Common Pitfalls
Stay Vigilant with Your GST Bills
The rise in fake GST bills means businesses must stay alert and informed. Don’t just assume that every GST bill you receive is valid. Use the steps we’ve outlined here to verify the authenticity of each bill. By being proactive, you’ll safeguard your business from legal issues and financial losses.
At Suvit, we’re here to help you streamline your accounting processes, including GST compliance. So, whenever you’re in doubt about a bill, remember: it’s always worth taking a few extra minutes to verify it.
Stay smart, stay compliant.
