India : The following tax explanation applies to companies who have a registered address is in India and Exotel renders services to them 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 actual 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 18% tax component.
The invoice documents are shared with series beginning with:
For prepaid customers: DR19SINXXXX
For postpaid customers: DO19SINXXXX
What is the GST credit which will be shown in the client’s portal?
For prepaid customers:
Since the 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 actual usage made by him during the month – which gets reflected in the invoices raised and not the Receipt voucher.
Example: Customer pays INR 11,800/- (10,000 + 18% taxes) to recharge his account on 05-Apr-2019.
The customer will be given a Receipt voucher (Series starting RDSIN19XXXXXX) as on the date of payment.
Say, the customer has a usage of INR 5000/- from 01-Apr-19 to 30-Apr-19. An invoice will be raised on 01-May-19 for April month’s usage for INR 5,900/- (INR 5,000+18% taxes for Series starting DR19SINXXXXX)
While preparing the GSTR1, we have to file the details of invoices raised for the month. So we will be filing the DR19SINXXX series for all the customers. Hence the input GST that the customer can take will be INR 900/- i.e, on the actual usage made by them, and not INR 1800 paid by them on the receipt voucher/-.
The balance amount will be reflected based on the usage in the subsequent months.
This is done because as per Section 16(1),(2) of the GST Act, Input credit can be claimed only based on utilization and not on payment.
For postpaid customers :
Postpaid customers can claim input GST credits on the invoices shared by us dated first of every month.
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!