Goods and Services Tax (GST) is a broad tax structure covering both goods and services. A GST Tax Invoice is the main document showing the supply of goods and services. It is also
a proof of supply. It helps the buyer of goods or receiver of services to use the input tax credit a (ITC). A registered person under GST should have a valid invoice to use the input tax credit.
Are You Required To Issue GST Invoice?
It is compulsory for every person registered under the Goods and Services Tax system to issue a tax invoice. So, if you are registered under GST, you must give a valid GST invoice.
Is There Any Format For A GST Invoice?
There is no fixed format prescribed for the GST tax invoice. It means that all GST taxpayers are free to design their GST invoice format. Only specific fields have been mentioned as compulsory fields in GST billing:
- Name of the supplier and name of the receiver;
- Address of both mentioned above, supplier's GSTIN and receiver's GSTIN, if the receiver is also a registered person;
- Invoice date;
- HSN/SAC code - To keep it simple for small taxpayers, the HSN/SAC code of the goods or services is not required if annual turnover is less than or equal to Rs. 1.5 Crores;
- Details of goods and services supplied with their quantity or units.
- if the supply is from one state to another state; place of supply with the name of State,
- Value of supply of goods or services or both in total;
- The taxable value of goods or services or both after reducing any discount or exemption,
- If the receiver is unregistered and the value of supply is Rs. 50,000 or more, then the invoice should contain, name, address of the receiver and the address of delivery, and the name of the state and its code.
- Tax Rate (IGST/SGST/CGST/UTGST and Cess)
- Amount of tax;
- If the place of supply and the location at which delivery is to be made are not the same, then the address of the place of delivery is also to be included;
- If the tax is payable on a reverse charge basis, then mention the name of the state;
- Supplier's signature (manual or digital), authorised representative's digital signature is also valid (not required in case e-invoice is issued)
- In case an e-invoice is issued, it shall contain Quick Response Code, having an Invoice Reference Number (IRN) in it.
Also Read: GSTR 9: Annual Return Filing, Format, Eligibility and Rules
GST Sample Invoice
How is GST Invoice Issued?
- In the case of taxable supply of goods - The invoice shall be issued in triplicate.
- Original copy - Recipient;
- Duplicate copy - Transporter;
- Triplicate copy - Supplier
- In the case of taxable supply of services- The invoice shall be prepared in duplicate.
- Original copy - Recipient;
- Duplicate copy - Supplier;
Further, the invoices issued shall be submitted online regularly, through the common portal www.gst.gov.in, in the form GSTR-1.
Also Read: GST Invoice Excel Create GST Compliant Invoices on your PC
What Is The Time Limit For Issuing GST Invoice?
The time limit for issuance of invoices depends on the nature of supply, whether it is the supply of goods or the supply of services.
- Time limit to issue invoice for supply of taxable goods:
- Where the supply of goods involves the transport of goods from one place to another - In such a case, the invoice shall be issued before the moving of goods or at the time of moving of goods for supply to the recipient.
- For example, A manufacturer of Bhopal, ‘X’ supplies goods to Ritesh Electronics, Gujarat. The goods were moved from their factory on 20th July. ‘X’ the manufacturer shall issue an invoice on or before 20th July.
- In another case, where supply does not involve transport of goods - In such a case, the invoice shall be issued before or at the time of delivering goods or making them available to the receiver.
- For example, Z Ltd. agrees to assemble and install machinery at the premises of ABC Enterprise. In this case, the supply does not involve the movement of goods. The invoice shall be issued before or when the machinery is installed (or made available) to the recipient ABC Enterprises.
- What if the supply falls under a continuous supply of goods - i.e. when the statements containing details of the supply or payments are made on a regular basis. It could be weekly, monthly or quarterly or yearly. The invoice shall be issued before or when each such statement is issued, or each such payment is received.
- For example, A supplier agrees to supply 2 water cans every day to Mr Anil's office, and the payment is to be made every month. In such a case, the invoice shall be issued before or when each such payment is received.
- Goods sent on sale or return basis - Where the goods being sent or taken on approval for sale or return are transported before the supply takes place, the invoice shall be issued at the earliest of the following -
- Before or at the time of supply or
- 6 months from the date of transportation
- Time limit to issue the GST invoice in case of the supply of taxable services:
- The invoice shall be issued before or within 30 days from the date on which supply is provided. The period is 45 days for insurance, banking or financial institutions, including NBFC.
- For example – A company Raksha Securities Ltd. provides security services to Mr X, who is organizing an event on 15th August. The invoice shall be issued on or before the date of service, that is, 15th August.
- The services are provided under a contract continuously for more than three months. The terms of payment are also agreed upon between the supplier and receiver; then, it is a continuous supply of services. The time limit for issuing the invoice for such services is determined as given in the following table:
The time limit for issue of invoice
1. Where the date on or up to which payment is to be made is mentioned in the contract
On or before the due date of payment
2. Where the above date is is not mentioned in the contract
Before or at the time when the supplier of service receives the payment
3. Payment is to be made on the completion of the event
On or before the date of completion of the event
- What if the supply of services ceases before its completion:
- In a case where the supply of services stops, before the completion of the supply, the invoice shall be issued at the time of breaking off of supply. Such an invoice shall be issued to the amount of the supply made till the date at which supply is stopped.
Also Read: Impact of GST on Different Sectors
Requirements For Issuing Invoices For Export Of Goods Or Services
- In case of export of goods or services, the invoice shall clearly state “SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX”.
- Details of an export invoice are the same as a tax invoice.
- However, if an unregistered supplier makes a supply of value greater than or equal to Rs. 50,000, then the export invoice shall include the name of the destination country in place of the state's name and code.
- In the case of e-invoicing, taxpayers will continue to generate tax invoices on their own software as per the e-invoice scheme (standard format as prescribed). These invoices will be then uploaded to ‘Invoice Registration Portal’ (IRP).
- IRP will then generate a unique ‘Invoice Reference Number’ (IRN), digitally sign it and return the invoice to the supplier. A GST e-invoice shall be valid only if it has a valid IRN.
- E-invoicing auto-updates the other returns and forms involved in the GST process once the information is entered in the e-invoice.
Applicability of E-Invoicing
- From 1st January 2021, e-invoicing shall apply to businesses whose aggregate turnover exceeds Rs. 100 crore, in any of the previous financial years from 2017-18 to 2019-20.
- It is to be noted here that aggregate turnover will include the turnover of all businesses registered under a single PAN across India.
- However, the Central Board of Direct Taxes has prescribed certain classes of taxpayers to whom the provisions of e-invoicing are not applicable irrespective of the turnover.
What Is A Revised Tax Invoice?
- There is a time gap between which the applicant applies for registration and when the registration certificate is actually granted. Further, the effective date of registration also depends on several factors. Hence there is a facility to issue revised tax invoices.
- This applies to the period during which the supplier was liable to be registered, and the application was also made. But, the certificate of registration is issued or granted on a later date. The supplier shall issue the revised tax invoice within one month from the issuance of the registration certificate.
Consolidated Revised Tax Invoice
There is an option provided to issue a Consolidated Revised Tax Invoice for all taxable supplies made during the period a recipient is not registered under GST. However, if the value of inter-state supplies is more than Rs. 2,50,000, a consolidated revised tax invoice cannot be issued.
No Requirement of Issuing GST Invoice
To simplify the procedure for small retailers, some relief is provided. If they do a large number of small transactions not exceeding Rupees Two Hundred per transaction to unregistered customers, then the invoice doesn't need to be issued for every such transaction. They can issue one single invoice at the end of each day containing all the transactions.
Tax Invoice Under Composition Scheme or Person Supplying Exempted Goods or Services
The composition levy is a method of levy of tax applicable for small taxpayers whose turnover is upto Rs. 75 lakhs.
A registered person supplying exempted goods or services, or both, or a registered person paying tax under composition levy shall issue a bill of supply instead of the tax invoice.
GST Invoice Under Reverse Charge Mechanism (RCM)
Reverse Charge is a mechanism under which the receiver of goods or services is supposed to pay the tax rather than the supplier of the good or services.
A recipient liable to pay tax under the reverse charge mechanism under section 9(3)/9(4) of the CGST Act has to issue an invoice only when supplies have been received from an unregistered supplier.
Also Read: A Brief Guide To Reverse Charge Under GST
E-way Bill And Invoice
- Sometimes goods may be transported under a delivery challan without an invoice.
- It includes the transportation of liquid gas, transportation of goods for job work, or supply to deemed distinct persons.
- Where the goods are being transported on a delivery challan in place of the invoice, the same shall be declared in E-waybill.
What Are Credit Notes And Debit Notes?
Credit Note: It is a method by which the value of goods or services in the original GST tax invoice can be easily revised. Once the credit note has been issued, the tax liability of the supplier shall reduce.
After the issue of invoice, if the following cases occur,
- it is found that the supplier has mistakenly declared a higher value of goods or services supplied or
- a higher tax rate than what applies to such goods or services or
- the quantity received by the recipient is less than what has been declared in the tax invoice or
- the quality is not to the satisfaction of the receiver that it can result in partial or total reimbursement of the invoice value or
- any other similar reason.
the supplier can issue a credit note to the receiver to reduce the supplier's tax liability in all cases cited above.
Debit Note: It is a method by which the value of goods or services in the original GST tax invoice can be easily increased.
After the issue of invoice, if the following cases occur,
- it is found that the supplier has mistakenly declared a lower value of goods or services supplied or
- declared a lower tax rate than what applies to such goods or services or
- the quantity received by the recipient is more than what has been declared in the tax invoice or
- any other similar reason.
the supplier can issue a debit note to the recipient to increase the supplier's tax liability to pay the proper tax liability in his returns easily.
You can read more about debit notes and credit notes here.
Hence from the above-mentioned discussion, it can be concluded that tax invoice in GST is the primary document that is essential for the further process. It is required for entering the value of supply and tax on inward and outward supply in GST returns, calculation of input tax credit, calculation of outward tax liability, etc.
A correct invoice can keep the procedure smooth and error-free for both the suppliers and the recipients. It is, therefore, the responsibility of the registered taxpayers to issue proper invoices for the supplies made by them within the prescribed time limits.
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- Is it necessary to issue GST invoice?
Yes, if your business comes under the GST Act, it is necessary to provide a GST invoice.
- Who is to receive the GST invoice?
The GST invoice is to be received by the customer who buys any goods or services.
- How many copies of invoices should be used?
3 copies should be used for goods while 2 should be used for services.
- Should an invoice serial number be maintained?
Yes, it has to be maintained at all costs.