Published 7 October 2026
A bill with “GST 18%” printed on it looks official. It is not always lawful. Some sellers are not allowed to charge GST at all, and some who are allowed must show certain details for the charge to be valid. A bill can be checked against the law in a few minutes, and this article sets out what to look for.
Not everyone may charge GST
The starting rule is in section 32 of the CGST Act:
A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act.
A shop or service provider without a GST registration may not add GST to its bill. Section 32(2) adds that even a registered person may collect tax only “in accordance with the provisions of this Act”.
A second group may not charge GST even though it is registered: businesses in the composition scheme, a simplified scheme for small businesses. Under section 10(4), a composition taxpayer “shall not collect any tax from the recipient on supplies made by him”. It pays a small percentage of its turnover from its own pocket instead.
A composition business is identifiable. Section 31(3)© requires it to issue a bill of supply instead of a tax invoice. Rule 5(1)(f) of the CGST Rules requires the words “composition taxable person, not eligible to collect tax on supplies” at the top of that bill. Rule 5(1)(g) requires the words “composition taxable person” on a notice or signboard at its principal place of business. A bill of supply has no tax rate and no tax amount on it, because none may be charged.
What a tax invoice must show
A registered business that does charge GST must issue a tax invoice. Rule 46 of the CGST Rules lists its contents. The ones a customer can check are:
- the supplier’s name, address and GSTIN
- a serial number, unique for the financial year, and the date of issue
- a description of the goods or services, with their HSN code
- the taxable value, after any discount
- the rate of tax and the amount of tax, shown separately as central tax and State tax, or as integrated tax
- for a supply between States, the place of supply, “along with the name of the State”
The split between central and State tax, or a single integrated tax, depends on where the supply is taxed. The guide on place of supply explains how that is decided. In most shop purchases within one State, the bill shows two equal halves: central tax and State tax.
The customer’s own name and address must appear only in some cases. For an unregistered customer, rule 46 requires them where the value of the supply is “fifty thousand rupees or more”. Below that, they are recorded only if the customer asks. For very small sales, under Rs 200, the seller need not issue an invoice to an unregistered customer who does not want one. It issues a single consolidated invoice for such sales at the end of the day.
Checking the GSTIN
A GSTIN is 15 characters long. Rule 10(1) sets out its structure:
- two characters for the State code
- ten characters for the supplier’s PAN
- two characters for the entity code
- one check character
Two quick checks follow from that structure. The first two digits should match the State the business operates from. Characters 3 to 12 are, for an ordinary business, its PAN. The rule allows a TAN instead, but only for registrations taken to deduct tax at source.
The GST portal has an official search at services.gst.gov.in/services/searchtp. Entering a GSTIN shows the legal name of the business, its date of registration, its constitution, the status of the GSTIN, its taxpayer type and its principal place of business. A registration that is not active, or a name that does not match the bill, is a reason to ask questions. The same “Search Taxpayer” menu has a separate search listing composition taxpayers.
When GST is charged wrongly
Charging GST without the right to do so does not let the seller keep the money. Section 76(1) provides that every person who has collected any amount “as representing the tax under this Act” must pay it to the Government. That applies “irrespective of whether the supplies in respect of which such amount was collected are taxable or not”. It applies to “every person”, registered or not. Section 76 also provides for a penalty equal to the amount collected, and interest from the date of collection.
Where the seller is registered, section 122(1) adds a penalty for collecting tax “in contravention of the provisions of this Act” and not paying it over within three months.
The law deals with the money through the Government, not directly between seller and customer. Once the department has determined the amount under section 76, any surplus is either credited to a Government fund or refunded “to the person who has borne the incidence” of it. In practice, the simpler protection is the set of checks below, made before paying, and a request for a correct bill.
Checking a bill
The steps, in order:
- Is there a GSTIN on the bill? Without one, no GST may be charged.
- Does the GSTIN look right? Fifteen characters, the State code matching the seller’s State, and a PAN in characters 3 to 12.
- Does the official search show the registration as active, under the same name?
- Is the business a composition taxpayer? If so, the bill should be a bill of supply with no tax on it.
- Does the bill show the rate and amount of tax, split into central and State tax or shown as integrated tax?
The GSTR-1 and GSTR-3B guide explains how the tax on a registered seller’s invoice is reported to the Government. The registration guide covers who must register.