India : The following tax explanation applies to companies who have a registered address is in India and Exotel renders services in India.
There is tax applicable for the services provided by Exotel and we do charge it. We charge 18.00% GST (Government mandated) at the time of writing this article and may change.
What is Receipt Voucher?
This gets generated whenever a client(prepaid) makes a payment. It contains GST component in it. For instance, if a client has made a payment of Rs.1,180/- it essentially comprises of a payment of Rs.1,000/- and tax component of Rs.180/- (18% of the service value).
The receipt voucher documents are shared with series beginning with RD0000
What is an Invoice?
Invoice is generated at the end of each month determining the usage of services by each client. For instance, if the client has utilized service for Rs.500/- the invoice is generated for Rs.590/- along with the Tax component.
The invoice documents are shared with series beginning with ND000
What is the GST credit which will be shown in the client’s portal?
Since GST component is shown both in the invoice and the receipt voucher, the confusion of which value reflects in the GST portal arises. Under GST Act, the client will be able to claim credit only based on usage – which gets reflected in the invoices. (i.e.) though the client has made a payment of Rs.1,180/- initially with GST component of Rs.180/-, he will be eligible to claim only towards his actual usage which is actually Rs.90/- for the service utilized. Therefore, credit of only Rs.90/- will be shown in his portal for that particular month. The balance amount will be reflected based on the usage in the subsequent months.
So, you can claim input GST on the invoices (ND000 series) and not the Sales receipt (RD000 series).
As per Section 16(1),(2) of the GST Act, Input credit can be claimed only based on utilization and not on payment.
Why is GST component missing in the invoice?
For prepaid clients for whom we have received payments before 01-July-2017, we would have technically collected Service Tax. The credits granted for those payments which remain unutilized by the end of June, would have been subsequently utilized in the month of July for which we started raising GST invoices. Since, we have already collected Service Tax for that usage, we cannot charge them again with GST, because of which we have shown it as Non-taxable service*. As these invoices does not have any GST component in it, though these have got generated after 01-July-2017, they do not bear any credits for the client in the client’s GST portal.
(*) Non-taxable service shows the value of credits utilized from their credit balance as on 30-June-2017 as per section 142(11) of GST Act, 2017
When will the credits reflect on the client’s portal?
The filing is done on 8th of every subsequent and the credits will be reflected for the clients in 4-5 working days post that.
Changes in Invoices
Change of GSTIN can be done until 5th of the subsequent month of invoicing. For instance, if the invoice is run on 01 November, the changes can be entertained until 05 December.
It is the same for change of address too.
Modifications of details can be done only in the following cases:
- The customer was earlier recorded with an incorrect GSTIN and wants to get it changed.
- We will not be able to revise it for a customer recorded as Unregistered earlier.
How is TDS deducted?
TDS is deducted @ 2% or 10% on the total taxable value(usage value in the invoice) and not the total invoice value. The reason being, the invoice value is inclusive of GST component and deducting TDS on that value will technically lead to tax on tax.
International (Everywhere other than India): The following tax explanation applies to companies who are registered outside India and Exotel renders services to them outside India.
Presently, export of services are zero rated so there will not be any GST charged for any international clients.
Here is a link to the official document by CBEC(Central Board of Excise and Customs) where Section 16(1) of the IGST Act, 2017 states the above.
This is how we deal with prepaid invoicing!