Appearance
GST on Purchase Transactions
This page explains how Goods and Services Tax (GST) applies to your procurement documents in PayInvoice Next — what gets calculated automatically, what you need to verify, and how to handle common scenarios.
How GST Is Calculated Automatically
When you create a Purchase Order or Purchase Invoice, PayInvoice Next calculates GST automatically based on three factors:
- Your company GSTIN — Determines your state code and registration type.
- Supplier GSTIN — Determines the supplier's state code and whether they are registered, unregistered, composition, or SEZ.
- Item tax category — Each item can be mapped to a GST rate (5%, 12%, 18%, 28%) and category (goods vs services, exempt, nil-rated, etc.).
The system compares the state codes from the company and supplier GSTINs to determine whether the transaction is intra-state or inter-state:
| Transaction Type | Tax Components | When It Applies |
|---|---|---|
| Intra-State | CGST + SGST (equal split) | Company and supplier are in the same state |
| Inter-State | IGST (full rate) | Company and supplier are in different states |
| Reverse Charge | CGST + SGST or IGST (paid by buyer) | Specific supply categories (e.g., unregistered supplier above threshold, notified services) |
You do not need to manually select the tax type — PayInvoice Next determines it from the GSTINs.
GST Fields on Purchase Order
When creating a PO, the following GST-related fields are auto-populated or available:
| Field | Auto/Manual | Description |
|---|---|---|
| Company GSTIN | Auto | Your company's GSTIN for this transaction. |
| Supplier GSTIN | Auto | Fetched from the supplier master. Verify if creating PO for a new supplier. |
| Place of Supply | Auto | Determined from supplier GSTIN state code. Override only for specific scenarios (e.g., bill-to/ship-to). |
| Tax Template | Auto | GST template selected based on intra/inter-state determination. |
| Tax Amounts (per line) | Auto | CGST, SGST, or IGST calculated per item based on rate and tax category. |
| Is Reverse Charge | Auto/Manual | Flagged automatically for known RCM scenarios. Can be manually set for edge cases. |
GST Fields on Purchase Invoice
Purchase Invoices carry the same GST fields as POs, plus additional compliance fields:
| Field | Description |
|---|---|
| Supplier Invoice No | The supplier's invoice number — must match exactly for GSTR-2B reconciliation. |
| Supplier Invoice Date | The date on the supplier's invoice — affects the period in which ITC can be claimed. |
| E-Invoice Applicable | Whether this invoice requires IRN generation via the NIC portal. |
| IRN | Invoice Reference Number (populated after successful e-invoice registration). |
| ITC Eligibility | Whether Input Tax Credit can be claimed on this invoice. |
Common Scenarios
Unregistered Supplier
If a supplier does not have a GSTIN (unregistered dealer), the system applies reverse charge mechanism (RCM) if the transaction exceeds the threshold. You pay the GST directly to the government. The invoice is flagged accordingly.
Composite Supplier
Suppliers registered under the Composition Scheme cannot charge GST on their invoices. PayInvoice Next blocks GST input from composition suppliers and flags the transaction for correct accounting.
SEZ Supplier
Purchases from Special Economic Zone (SEZ) suppliers are treated as inter-state supplies with IGST, but may be zero-rated or exempt depending on the nature of supply. The system identifies SEZ transactions from the supplier GSTIN.
Bill-to / Ship-to (Different States)
When goods are billed to one location but shipped to another state, the place of supply follows the shipping address, not the billing address. Override the Place of Supply field in this scenario to ensure correct CGST/SGST vs IGST determination.
Verifying GST Before Submission
Before submitting any Purchase Order or Invoice, check:
- Supplier GSTIN is correct — The system validates format but cannot verify if the supplier's registration is currently active. For new suppliers, verify on the GST portal.
- Tax amounts match supplier's quote or invoice — Small rounding differences are normal (within ₹1). Large differences indicate a rate mismatch.
- Reverse charge flag — If the supplier is unregistered or the supply falls under RCM, ensure the reverse charge flag is set.
- Place of supply — Correct for bill-to/ship-to scenarios.
TIP
If you see a tax mismatch between your PO and the supplier's invoice, check the HSN/SAC code and tax category on the item. Incorrect item tax mapping is the most common cause of GST calculation differences.
Related Pages
- TaxGenie Compliance Overview — Full compliance engine overview
- E-Invoice & E-Waybill — IRN generation details
- Purchase Invoice GST — GST fields on the PI form
- Purchase Reconciliation — Matching with GSTR-2B