Why understanding about GST invoices is important?
One of the important and common issue in GST is of incorrect invoices or inappropriate invoice format. Many of taxpayers perform numerous errors in GST invoices due to lack of understanding about the law relating to GST invoicing and GST Rules. As invoice is important to avail GST credit (ITC), incorrect invoice might obstruct GST credit availment. Thus it is of paramount importance to
- Get correct GST invoice as a purchaser and
- Issue correct GST invoice as a Seller or supplier.
If in case taxpayer does not issue such an invoice to his GST registered customer, his customer loses the ITC claim. Which in turn, adds up to the cost of customer and the taxpayer eventually loses its customers.
We take you to some of the important aspects of GST invoicing to throw more light on the topic.
Who issues GST Invoice?
GST invoice is required to be issued by a registered taxpayer. The taxable invoice will only entitle the purchaser or receiver to claim input tax credit (ITC). There is no specified or fixed format for the invoice but certain prescribed information shall be mentioned on the face of GST invoice.
Non registered dealers or composite taxpayers are required to issue Bill of Supply and are not eligible to issue GST invoice to their clients.
Which details are needed to be disclosed in GST Invoice?
A Goods and Service Tax (GST) invoice shall clearly disclose the following:
- Name, address and GSTIN of supplier and recipient
- Name and address of recipient, if not registered
- Serial number and date
- HSN or SAC codes , if required
- Quantity of goods
- Description of goods and services
- Total taxable value of supply
- Total value of supply
- Place of supply
- Address of the delivery if different from the place of supply
- Tax rates
- Amount of tax charged- CGST, SGST/UTGST and IGST, Cess
- Tax payable on reverse charge
- Signature of authorised signatory
When to Issue GST Invoices?
Certain people have confusion regarding the timing of issuing GST invoice. Whether invoice should be issued first and then the goods are to be supplied or goods are to be delivered first and then invoice should be issued? The answer differs from case to case. Let us end this confusion by taking a close look at various events and the timing of issue of invoices under each of them.
In case Supply of Goods is made
When goods are supplied by a registered taxpayer the invoice is required to be issued either
- 1. Before the removal of Goods, or
- 2. After the removal of Goods, or
- 3. Delivery of Goods, or
- 4. Making them available to the Recipient.
Below are the various time limits to issue GST invoice under different situations.
| Category of Supply |
Time limit |
| Movable goods |
Invoice shall be issued at the time of
-
Removal of goods for supply
|
| Non-movable goods |
In case of Non Movable Goods Invoice shall be issued at the time of
-
Delivery of goods or
-
Making them available to the recipient
|
| Continuous supply of goods |
For continuous supply invoice shall be issued
-
Before or
-
At the time of successive statement issued or
-
When payment is received
|
| Goods sent on approval |
Invoice shall be issued
-
Before or
-
At the time of supply, or
6 months from the date of removal
( whichever is earlier) |
In case Supply of Services is made
A registered person supplying taxable services shall
- Before or after the provision of service but
- Within a prescribed period,
shall issue a tax invoice.
As per Section 31 of CGST Act 2017 a valid tax invoice shall have the following details
- The description
- Value
- Tax charged thereon and
- Such other particulars as may be prescribed.
From the above discussion it can be concluded that tax invoice must be issued at the earliest of any of the following time periods:
- 1. Before the Provision of Service, or
- 2. Within 30 days from the provision of service
Note: The extended time limit of 45 days is available in case of Banking / NBFC or Insurance companies
To summarise we can understand the above discussion in an easy manner as under
| Type of supply |
Particulars |
Invoice shall be issued |
|
Supply of Goods |
Involving movement of goods |
Before or at the time of removal |
| When no movement of goods |
At the time of delivery or making available thereof to the recipient |
| When goods sent on approval |
(a) Before or at the time of supply
(b) 6 Months from the date of removal
(whichever is earlier) |
| In case of continuous supply |
Before or at the time of each successive:-
(a) Statements of accounts is issued or
(b) Payment is received |
|
Supply of Services |
General services |
Within 30 days from the supply of services |
| Banking, insurance |
Within 45 days from the supply of services |
| In case of continuous supply of services |
| (a)due payment date is ascertainable with the contract |
On or before the due date of payment |
| (b) due payment date is not ascertainable with the contract |
before or at the time of recipient of payment |
| (c) Payment is linked to the completion of an event |
on or before the completion of that event |
What is the minimum amount for raising a GST Invoice?
Though it is always a good practice to issue GST invoice for any amount, however as per GST Act [Sec 31(3) (b)] read with rules, a tax invoice need not be issued when the value of the goods or services supplied is less than INR 200, if -
- The recipient is unregistered and
- The recipient does not require an invoice.
In case if the recipient demands for the invoice, the same should be issued irrespective of the amount involved.
What is the minimum number of GST Invoice copies to be issued?
GST law requires taxpayers to issue specified number of tax invoice copies. Lets have a look at number of invoices we have to issue
- In case of supply of goods, the supplier shall issue 3 copies of the invoice
- Original
- Duplicate, and
- Triplicate
- Whereas, in the case of supply of service, he shall issue only 2 copies of the invoice
- Original
- Duplicate
Below is the table explaining, number of invoices to be issued in a simplified manner
|
In case of Supply of Goods |
In case of Supply of Services |
| Original invoice: |
The original invoice is issued to the receiver. A buyer gets the first copy of the invoice, marked as ‘Original for Recipient’. |
The original invoice is issued to the receiver. A buyer gets the first copy of the invoice, marked as ‘Original for Recipient’. |
| Duplicate copy: |
The duplicate copy is for the transporter, and is marked as 'Duplicate for transporter'. If the supplier has Invoice reference number, then duplicate is not required.It is given to a supplier when he uploads a tax invoice issued by him in the GST portal. It is valid for 30 days from the date of upload of invoice. |
The duplicate copy is for the supplier, and is marked as 'Duplicate for supplier'. |
| Triplicate copy: |
This copy is retained by the supplier for his own record, and is marked as 'Triplicate for supplier'. |
- |
What are some of the essential particulars in a GST Invoice?
A GST Invoice which does not abide by the GST laws and rules is known as invalid invoice. Hence, it becomes important for us to understand about the correct GST Invoice format.
But, to our surprise, there is no such framework prescribed under the law. Instead, the law has laid down the list of particulars to be included in a valid GST Invoice.
As per CGST Rules, 2017, a Tax Invoice shall contain the following particulars, namely,-
- GSTIN of the supplier
- Name and address of the supplier
- Unique Invoice no. (not exceeding 16 characters)
- Date
- Recipient details like
Name,
Address and
GSTIN
- Delivery Details like
Name and address of the recipient and
Address of delivery,
State and its code, (in case of un-registered recipient and value > 50,000)
- Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice.
- (g) Harmonised System of Nomenclature code for goods or Services Accounting Codes for services; (HSN/SAC codes)
- (h) Description of goods or services;
- (i) Quantity in case of goods and unit or Unique Quantity Code thereof;
- (j) Total value of supply of goods or services or both;
- (k) Taxable value of the supply of goods or services or both taking into account discount or abatement, if any;
- (l) Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
- (m) Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
- (n) Place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce;
- (o) Address of delivery where the same is different from the place of supply;
- (p) Whether the tax is payable on reverse charge basis; and
- (q) Signature or digital signature of the supplier or his authorised representative:
What are the specific requirements relating to Invoices for Export of Goods and Services?
Particulars of an export invoice are same as a tax invoice.However , where recipient is unregistered and value of supply is Rs.50000 or more, instead of name of state and its code, in case of an export invoice,name of the country is to be mentioned. In addition to this the following pointers shall be adhered:
- Export Invoice shall be endorsed
As per GST Rules, in the case of the export of goods or services, the invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX”
or
“SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may be.
- Shipping bill should be attached with export invoices
Shipping Bill is also important document which should be accompanied with Export Invoices. As per GST Law, exporter is eligible to get refund of accumulated Input Tax Credit (ITC) pertaining to the tax period. GST authorities give utmost importance to shipping bills for processing refund applications. Thus one must take care to see that export invoices are always accompanied with respective shipping bill for refund application.
What is Bill of Supply under GST India?
As per Sec 31(3)(c) of CGST Act 2017, a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed:
Thus, as per combined reading of GST Act with GST rules, Bill of Supply is to be issued by a registered supplier in the following cases:
- Supply of exempted goods or services
- Supplier is paying tax under composition scheme
What is the similarity between Bill of Supply and Tax Invoice?
Similar to tax invoice, a bill of supply need not be issued when the value of goods or services supplied is less than INR 200, unless the receiver insists for the bill. However, a consolidated bill of supply should be prepared at the end of the business day for all such supplies for which the bill of supply is not issued.
Note :- However composition taxable person , shall mention the words “Composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply.
What is Invoice-cum-Bill of Supply under GST Act?
Where a registered person is supplying taxable as well as exempted goods or services or both to an unregistered person, a single “invoice-cum-bill of supply” may be issued for all such supplies.
Are there any Consequences if GST invoice is not having specified particulars?
As per Rule 36(2) of CGST rules, Input tax credit shall be availed by a registered person only if all the applicable particulars are contained in the said document.
But, if the said document does not contain all the specified particulars but contains
- Amount of tax charged
- Description of goods or services
- Total value of supply of goods or services or both
- GSTIN of the supplier and recipient and
- Place of supply in case of inter-State supply
Input tax credit may be availed by such registered person.
Thus, if all required particulars are not present in GST invoice, then ITC (Input Tax Credit) availed on such invoice need to be reversed.
What is the document required to be issued for Advance payments?
As per sec 31(3)(d), the registered person shall, upon receipt of advance payment issue a receipt voucher or any other document. Such document shall contain the prescribed particulars confirming receipt of such payment.
Thus once a Seller or supplier receives advance, then he shall issue receipt voucher.
In case payment has been received but no supply has been made later on, which document shall be issued?
Where an advance payment has been received, but subsequently no supply is made, a refund voucher against such payment shall be issued.
When delivery challan shall be issued?
In some of the below specified cases transportation of Goods shall be made without Issue of invoice, when
- (a) Liquid Gas is Supplied and quantity at the time of removal is not known,
- (b) Transportation of goods for job work,
- (c) Transportation of goods for reasons other than by way of supply, or
- (d) Such other supplies as may be notified by the Board.
In all of the above cases delivery challan shall be issued in place of tax invoice.
Debit or Credit Note
When is Debit Note issued?
Debit Note (also called supplementary invoice) is issued by the seller. Debit note is issued in addition to tax invoice when due to some reason an additional amount is required to be paid later on.
This situation arises mainly due to two reasons, when original invoice has been issued
- At a lower taxable value or
- At a lower tax amount
When is Credit Note issued?
Credit Note is issued by the seller at the time when the amount payable by the buyer decreases than invoice already issued.
This situation arises mainly due to two reasons, when original invoice has been issued
- At a higher taxable value or
- At a higher tax amount
