GST Invoice

A GST invoice is a statement or receipt for goods or services delivered to a customer by a merchant or service provider. Along with the total sum payable, it precisely lists the goods and services. Before CGST and SGST are applied, the goods or service prices can be found on a GST invoice. 

The taxes associated with each good or service that a customer acquires from a vendor or provider are also shown on a GST invoicing bill.

What is a GST Invoice?

A GST Invoice is an essential document that aids customers in understanding the total they owe for services and products purchased. This invoice outlines each service/product and how much CGST and SGST are imposed on them. Prior to making a payment, one can conveniently review their GST invoice for accurate costs of said items or services. Not only does a GST invoice bill showcase each product or service that has been purchased from the seller or provider, but it also exhibits the amount of taxes charged on every purchase.

Under the GST Act, sellers must issue a GST invoice or bill for goods sold and services provided where the total value exceeds ₹200. This document should generate as soon as an order of goods/services is confirmed. The GST Invoice works by providing structure and clarity that enable customers to keep track of their payments and deductions. It is also used to claim Input Tax Credit (ITC) from the government. Moreover, in cases where the invoice amount does not exceed ₹2 lakhs, it must be signed by both parties before payment can be made.
 

What Components are Absolutely Necessary for a Valid GST Invoice?

It is important to keep accurate records in order to remain compliant. Failure to issue a valid GST invoice can lead to penalties as per government regulations. Therefore, every GST invoice must include:

1.    Customer name
2.    Invoice number and date
3.    Shipping and billing address
4.    Place of supply
5.    Customer and taxpayer’s GSTIN (if registered)
6.    Signature of the supplier
7.    Whether GST is payable on a reverse charge basis
8.    Rate and amount of taxes i.e. CGST/ SGST/ IGST
9.    Taxable value and discounts
10.    Item details [description, quantity (number), unit (meter, kg, etc.), total value]
11.    HSN code/ SAC code

For invoice recipients who aren't registered and whose value is greater than ₹50,000, the following should be included:

1.    Name and address of the recipient
2.    State name and state code
3.    Address of delivery
Prescribed GST Bill Formats
As per Section 2(66) of the Central Goods and Services Tax Act of 2017, we can turn to Section 31 for details on what an official tax invoice must include. While a general guideline is provided in this section, it does not provide exact specifics, nor does it restrict us to manual invoices; electronic formats are also accepted. Therefore, regardless if you utilize digital or paper documents as your GST invoices, they should all follow the criteria outlined in Section 31.
GST Invoice Rules
To remain compliant with GST regulations, it is important to understand the rules and restrictions that apply.

The minimum amount that can be invoiced under the Goods and Services Tax (GST).

●    If the value of goods or services supplied is below ₹200, then a tax invoice is not issued.
●    GST is not issued if the recipient is unregistered
●    If the recipient requests an invoice, one should be issued accordingly; otherwise, no invoice is necessary

At the end of each day, a consolidated tax invoice or an aggregate statement should be compiled for all goods and services that do not include their own individual invoices.
 

Managing purchases through URD - Reverse Charge Invoice

If a registered individual obtains goods or services from an 'unregistered supplier,' the recipient must pay applicable taxes and generate an invoice on their purchase date.

Managing advance payments – Receipt Voucher

When a registered vendor obtains an advance payment for goods or services, it is imperative they provide the recipient with an acknowledgment of receipt voucher as proof that the funds have been received.

Managing exports efficiently - Export Invoice

In order for an export invoice to be complete, it must contain not only the standard requirements of a tax invoice but also include additional information as follows:

●    A valid invoice must state either "Supply meant for export under bond or letter of undertaking without payment of IGST" or "Supply meant for export on payment of IGST"
●    Name and address of the recipient
●    Delivery address
●    Name of the destination country
 

Managing special deliveries - Delivery Challan

In certain business scenarios, a Delivery Challan can be issued, including:

●    Transportation of goods for job work
●    Supply of liquid gas, where the quantity at the time of removal from the place of business of the supplier is not known
●    Transportation of goods for reasons other than supply
●    Any other notified supplies
 

Managing revisions in the values of invoices already issued – Credit Note / Debit Note

If you need to make alterations to the GST or taxable value charged in an invoice, the supplier must generate a debit note or supplementary invoice, or credit note.

1.    Credit Note: Credit notes are released by a supplier to keep track of any reductions in taxable value and/or GST charges that have been included on the original invoice. To ensure compliance, they must be issued no later than 30th September after the completion of the financial year where their respective supply was made or before filing for their related annual return – whichever is sooner.
2.    Debit Note / Supplementary Invoice: If a supplier needs to record an increase in GST charged on the original invoice, they must issue a Debit Note / Supplementary Invoice.

For the creation of supplementary invoices, debit notes, and credit notes to be effective, they must include the following information:

●    It is essential to clearly state the type of document, whether it be a 'supplementary invoice, or 'revised invoice,'  in an obvious manner
●    Name, address, and GSTIN of the supplier
●    For each financial year, a serial number made up of only alphabets, numerals, and special characters such as hyphens ("-") or slashes ("/"), which are unique from all others, must be assigned
●    Date of issue of the document
●    For recipients who are registered, please provide their name, address, and GSTIN/Unique ID Number.
●    If the recipient isn't registered, you must include their name, delivery address (including state and PIN code), and the address of where to send it
●    Serial number and date of the original bill of supply or tax invoice 
●    The taxable value of goods or services, the applicable tax rate, and the amount of tax debited/credited to the recipient should be mentioned
●    The supplier or their officially approved representative must provide a signature or digital signature.
 

Issuing a GST Invoice: When Should it be Done?

Making a GST invoice right after the delivery of items or services can be hard sometimes. That is why the Indian Government has presented general guidelines for suppliers so as to simplify matters.

On Goods (Normal)

According to Section 2 (96) of the CGST Act, 2017, suppliers are mandated to generate an invoice on or before the date when goods are removed - this removal can refer either to the physical transportation of said products to the recipient or goods collected from the supplier by the recipient.

On Goods (Continuous Supply)

If you have an ongoing business relationship with a customer, then you can issue a GST invoice before the account statement is created or payment is received.

On Services

To ensure compliance with GST regulations, every invoice for services rendered must be issued within 30 days of having provided the service.

On Bank and NBFC Services

Unlike most services that expect GST receipts to be issued within thirty days when it comes to financial institutions offering monetary help, the deadline for providing a GST receipt is forty-five days from the day of service supply.
 

What are the Other Types of Invoices?

In addition to a tax invoice, here are some other types of GST invoices you should be aware of.

Bill of Supply

The bill of supply is a document issued by the supplier to declare that no GST has been charged on goods or services. It does not require any specific details other than the name and address of both the recipient and supplier, date of issue, description of goods/services supplied, HSN code (if applicable), and taxable value. Accordingly, the recipient is unable to claim an input tax credit on this document. Additionally, if a registered entity deals in both taxable and exempt services/goods, then they are entitled to issue an all-inclusive invoice-cum-bill of supply based upon Notification No. 45/2017 of Central Tax.

Aggregate Invoice

This type of GST invoice is issued when multiple tax invoices have been consolidated into one document. This aggregation process can only be carried out if the goods on each previous invoice have the same HSN code, tax rate, and place of delivery.

Credit Note

A credit note can refer to an exchange or return of goods or services whereby the supplier must refund any amount received. In cases where a registered entity needs to record an increase in taxable value, or GST charged on the original invoice, they must issue a Debit Note / Supplementary Invoice.

Debit Note/Supplementary Invoice

For those times when a reduction in taxable value or GST charged is required to be made, the supplier must issue a Debit Note/Supplementary Invoice. This document should include all details from the original invoice, including an amendment clause that explains why and how the taxable value or GST amount has changed.

Reverse Charge Invoice

In cases of reverse charge invoices, the liability to pay tax lies with the recipient instead of the supplier. This type of invoice is accompanied by a detailed description of goods/services supplied and must be produced at least one day before delivery or receipt (whichever is earlier). It should also include details like GSTIN and PAN numbers, HSN codes, etc. Additionally, it should also have an additional clause that states, "Liability to pay tax is on the recipient."
 

When is Issuing a Tax Invoice Not Mandatory?

The responsibility of issuing a tax invoice is not required when the value of goods/services being supplied:

●    Fall below ₹200
●    Are received by an unregistered taxpayer (who cannot claim input credit)
●    When the recipient expresses that they do not need an invoice.

Copies of Invoices for Goods Supply

●    The original copy goes to the recipient
●    The duplicate copy is held by people liable for transporting purchased items from supplier to recipient
●    The supplier takes the triplicate copy

Copies of Invoices for Services Supply

●    The original copy goes to the service recipient.
●    The supplier keeps the duplicate for internal use.
 

Conclusion

GST invoices are a necessary document for all businesses and individuals providing goods or services that are subject to GST. To stay compliant with the Indian government's taxation rules, it is important to familiarize yourself with various types of GST invoices, their associated requirements, and what details they must include. Being aware of which type of invoice is required in each situation can help ensure you avoid any penalties and remain compliant. Additionally, issuing accurate invoices helps streamline your business process and makes filing taxes much simpler.