Invoicing under GST

Guide to invoicing under GST

As per directions by GST Authority, a time limit of 30 days for reporting of invoices from date of invoice is imposed on e-invoice portals, and is applicable for taxpayers with AATO greater than or equal to 100 crores from 1st November 2023.

What is GST Tax invoice ?

If you have a GST-registered business, you’ve probably heard of a GST invoice. Here is a quick summary for all customers.

A GST-compliant purchase invoice includes the names and addresses of the parties engaged in the transaction, as well as a list of all products and services supplied and their pricing. Among other things, this bill shows the percentage of discounts and taxes applied to each item.

Who is required to prepare the tax invoice?

If you are registered under GST and are providing goods or services, you must issue a tax invoice to the recipient.

Mandatory fields in GST Tax invoice

Here is a list of information that a GST tax invoice must include according to with Rule 54 of the CGST Act of 2017.

  • Supplier’s name, GSTIN, and address
  • Invoice number 
  • Date of publication
  • Type of invoice
  • Addresses for shipping and billing
  • Username of the customer
  • Name, address and Goods and Service Tax Identification number (GSTIN) of the recipient, if registered.
  • Information on the goods and services offered, such as description, amount, etc.
  • HSN code or the SAC code
  • Rates of SGST, CGST, IGST, UTGST, and IG 
  • Total tax due and any applicable discounts
  • Reverse charging
  • Author’s signature on the invoice

GST tax invoice rules

To follow the above guidelines, issuers need to pay attention to certain rules that specify the “what” and “how” of invoice contents.

GST invoice serial number rules

The following are the requirements that issuers must follow under Rule 46 (b).

  • Invoice numbers must be consecutive or sequential.
  • They must be unique within a financial year and contain an alphanumeric combination.
  • A serial number cannot have more than 16 characters.
  • GST should be divided into three components: CGST, SGST, and IGST. It cannot be charged in full.
  • Any transaction made outside of the issuer’s state is subject to a separate tax known as IGST. However, SGST and CGST should be levied on sales within the same state.

GST invoice signature rules

The CGST rules make the issuer’s signature one of the necessary fields on a GST invoice. The following are the specifications for a valid signature:

  • According to the Information Technology Act, 2000, bills may be signed by hand or digitally.
  • The supplier or his/her authorised representative must sign the GST invoice bill.

According to section 116 (2), his/her ‘authorised representative’ can be a company secretary, a practising lawyer, a chartered accountant, a retired official of the Commercial Tax Department, or a regular employee functioning on the supplier’s behalf.

GST invoice payment rules

Another need under the CGST Act is for a GST-registered individual to make purchases from a merchant who is not registered. There are two possibilities here.

  • If a registered individual purchases something from an unregistered entity, the former must issue a tax invoice.
  • If the registered individual gets GST-exempt supplies, he or she must provide a bill of supply rather than an invoicing bill.

When to issue a GST invoice?

The time limits differ based on the kind of supply. Here’s a quick explanation.

For goods

  • Normal supply: In such situations, the GST invoice bill must be given on or before the removal of the purchased item. Removal is defined in Section 2 (96) of the main Act as being quickly collected by a receiver or despatched for delivery by the supplier. 
  • Continuous supply: In this case, the date of issuing of the invoice under GST must be on or before receiving payment or generating the account statement.

For services

  • General case: Invoices must be issued under GST within 30 days of the services being rendered.
  • Financial services: The 45th day from the date of service delivery is the last day for issuing an invoice under GST for services supplied by banks, NBFCs, and other financial institutions.

What are other types of invoices under GST?

Aside from tax invoices, there are several other types of GST invoices.

Bill of supply

The main difference between a bill of supply and a tax invoice is that the former charges 0% or no GST. As a result, this form of invoice might be sent in two cases.

  • When a GST-registered supplier decides to use the composition scheme.
  • When a supplier that is GST-registered sells products and services that are exempt from GST.

Therefore, based on this document, the recipient is not permitted to claim an input tax credit.

Also, if a registered entity trades in both exempt and taxable services/goods, it may issue an all-inclusive invoice-cum-bill of supply in line with Central Tax Notification No. 45/2017.

Aggregate invoice

If a seller sends multiple invoices to an unregistered buyer, each of which is less than Rs.200, he or she can send a single invoice in total all of the amounts.

Debit and credit note

When there is a mismatch in a previously issued tax invoice for a product or service, such commercial papers are issued. 

When one of these two requirements is met, a debit note is issued.

  • The taxable value on the previously issued tax invoice is lower than the right amount.
  • The tax amount charged on this tax invoice is less than the real value.

While on the other hand, A credit note is issued for the opposite reason.

  • The tax amount on the invoice is higher than the correct amount.
  • When there is a problem with the services or items delivered, the buyer returns them and requests a refund. 

Aside from the types of invoices mentioned above, there are several other documents and vouchers associated with such transactions, depending on a variety of conditions.

Revising invoices issued before GST

There are various possibilities for receiving an incorrect GST invoice bill. As a solution,there is a provision for correcting such tax invoices before. 

Before receiving the permanent certificate, every seller must apply for temporary registration. Any tax invoice issued between the date of GST implementation and the date of the issue of the permanent registration certificate must have a revised GST invoice issued against it. This must be done within one month after receiving the registration certificate.

This revised tax invoice under GST must include the words “Revised Invoice” as well as all of the other mandatory details of a tax invoice as previously discussed.

How many copies of invoices should a supplier issue?

According to the type of supply, a specific number of invoice copies are issued as proof of transaction.

1. For goods

The supplier must provide three copies of the GST invoice bill.

Original copy: picked up by the buyer.

Duplicate copy: received by the people transporting the goods from the supplier to the recipient.

Triplicate copy: It must be kept with the seller.

2. For services

When it comes to services, the issuer must prepare two copies of the invoice.

Original copy: sent to the purchaser

Duplicate copy: Remains with the supplier for future reference.

And with that, we end our discussion on the Invoicing under GST. If you have any questions, drop them in the comment section below.