GST problems in software almost always trace to the same root cause: tax was treated as a reporting concern rather than a property of the transaction. Once an invoice has been issued with the wrong place of supply or the wrong rate, the reporting cannot be fixed without amending the underlying document.
This is a technical overview. Your specific filing positions should be confirmed with your chartered accountant.
Place of supply drives everything
Whether a transaction attracts CGST and SGST or IGST depends on place of supply, which is not simply the customer's billing address. The rules differ for goods and services, and services have several special cases — immovable property, event admission, transportation, telecommunications.
Systems that determine tax type from the shipping state alone will be wrong in a predictable set of situations. Place of supply should be computed by explicit rules and stored on the transaction, not inferred at reporting time.
Rates belong to products, and change
Rates are determined by HSN codes for goods and SAC codes for services, and they are revised periodically. A system with rates hard-coded, or worse entered per invoice, will drift out of compliance quietly.
Maintain a rate master keyed by HSN or SAC with effective dates, so an invoice raised last year can be reproduced with the rate that applied then.
Invoice particulars are prescribed
A tax invoice must carry specific particulars: supplier GSTIN and address, a sequential invoice number unique within the financial year, date, recipient details with GSTIN where registered, HSN or SAC, taxable value, rate and amount per tax head, and the place of supply where it differs from the recipient's location.
Numbering deserves attention — sequences must be gapless and unique within the year, which interacts awkwardly with cancelled documents. Cancel with a credit note rather than deleting and reusing a number.
E-invoicing and IRN
Above the applicable turnover threshold, business-to-business invoices must be reported to the Invoice Registration Portal, which returns an IRN and signed QR code that must appear on the invoice. An invoice without a valid IRN, where required, is not a valid tax invoice.
The threshold has been revised downward several times, so applicability should be a configurable rule rather than a hard-coded assumption.
Credit and debit notes
Corrections after issue are made through credit and debit notes linked to the original invoice, not by editing it. Returns, discounts agreed after the fact and rate corrections all follow this path, and the linkage matters for reconciliation.
Exports and zero rating
Export of services can be zero-rated where the statutory conditions are met, either under a letter of undertaking without payment of tax or with payment and subsequent refund. Software companies serving overseas clients need invoicing that supports the chosen route and captures the required documentation.
Reconciliation is where problems surface
Input tax credit depends on suppliers having reported correctly. Systems should support reconciliation between purchase records and the auto-populated returns data, flagging mismatches while they can still be resolved with the supplier.