We require clarification regarding GST handling in ERPNext when booking service invoices received from other states.
Scenario:
While booking supplier invoices for services such as hotel accommodation, food, and restaurant bills that are availed in states other than Gujarat, the supplier invoices are issued with CGST + SGST of the respective state (e.g., Maharashtra, Karnataka, etc.).
However, when we attempt to record these invoices in our Gujarat-registered company within ERPNext, the system automatically expects IGST instead of allowing CGST + SGST.
Concern:
In practice, services such as hotel stays or restaurant services consumed in another state are billed with local CGST + SGST by the supplier, since the place of supply is the state where the service is provided.
Additionally, as per GST provisions (specifically blocked credit under Section 17(5) for certain services such as food and beverages), these may also be treated as ineligible input tax credit in some cases.
Key Questions:
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Why does ERPNext enforce IGST when booking such supplier invoices in a Gujarat-registered entity, even though the supplier invoice carries CGST + SGST of another state?
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What is the recommended way to book such invoices in ERPNext where:
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The service is availed in another state.
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The supplier invoice contains CGST + SGST of that state.
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The credit may be ineligible or needs to be booked as expense.
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Is there a configuration or standard workflow in ERPNext to handle such cases correctly without tax validation conflicts?
Use Case Example:
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Company GST Registration: Gujarat
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Service Location: Another State (e.g., Maharashtra)
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Supplier Invoice: CGST + SGST (Maharashtra)
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ERPNext System Expectation: IGST
Because of this mismatch, we are unable to book the invoices in the same way as they appear on the supplier bill.
We would appreciate guidance on the correct accounting treatment and system configuration within ERPNext to handle such transactions.
