Fundamentally, invoices are documents which notify a buyer of the legal obligation to pay money against buying of goods/services.
Credit matching and reconciliation depends on the invoices uploaded by tax payers. Businesses have to make sure that invoice formats obey the GST guidelines. The government has notified invoicing rules along with a template of invoice GST INV-01. It covers the elements such as supplier’s details, GST tax rates etc that one should include in a bill.
In the GST regime, a trader has to issue two types of invoices.
1. Tax Invoices
A registered taxable person issues tax invoice on supply of taxable goods and/or services. The tax invoice is issued to registered dealer. The registered dealer can use it to claim Input Tax Credit.
Number of Copies:
The supplier has to issue three copies of the invoices on supply of goods.
*IRN stands for Invoice reference Number. The supplier can get an IRN from the common portal (GSTN) by uploading a tax invoice issued by him. The IRN will be valid for 30 days from the date of uploading.
A service provider has to issue only two copies of a bill. An original copy is for the recipient of service and a duplicate copy is for the supplier’s record.
2. Bill of Supply
Tax invoices are generally issued when tax is charged. In GST there are some instances where the supplier is not allowed to charge any tax. In such a case, a supplier cannot issue a tax invoice. Instead, the supplier will issue a Bill of Supply. If the bill amount is less than 200, it isn’t necessary to issue a Bill of Supply. The shopkeeper should prepare a combined bill of supply at the end of the business day for such supplies.
Cases where a registered supplier needs to issue bill of supply:
Supply of exempted goods or services
Supplier is paying tax under composition scheme
Details required in the GST Invoice Format
Time Limit for Issuing Invoices:
When a registered person supplies goods, he should issue the tax invoice before or at the time of:
Removal of goods, where supply involves movement of goods
Delivery of goods to the recipient, where supply does not need movement of goods
Issue of account statement/ payment, where there is continuous supply
When a registered person supplies services, he should issue the tax invoice before or at the time of:
30 days from the date of supply of the service
45 days from the date of supply of the service, where the supplier is an insurer or banking company or a financial institution
If the service provider is an insurer, a banking company, a financial institution or a telecom operator, and the supply is between distinct persons,
the invoice can be issued before or at the time the supplier records the supply in his books
or before the end of the quarter in which he provides the services.
A supplier must issue a debit or credit note to revise the taxable value under or the GST charged on an invoice.
Debit note – A debit note or supplementary invoice to record increase in taxable value &/or GST charged in the original invoice. The supplier will issue the debit note.
Credit note – A credit note to record decrease in taxable value &/or GST charged in the original invoice. The supplier will issue the credit note:
- on or before 30th September following the end of the financial year in which the supply was made OR
- the date of filing of the relevant annual return, whichever is earlier.
What details should debit notes, supplementary invoices and credit notes include?
Debit notes, supplementary invoices and credit notes must include the following details:
Invoicing for Special Cases:
a. On receipt of advance payment:
The recipient will issue a receipt voucher for the advance payment received. After a dealer issues a receipt voucher the dealer can issue a refund voucher against the advance received , if the supply does not take place.
b. For transportation of goods without issue of invoice
Transportation of goods without an invoice can happen in the following cases:
Transportation of goods for job work
Supply of liquid gas, where the quantity is not known
Transportation of goods for reasons other than supply
Any other notified supplies
In these cases, the consignor can issue a delivery challan instead of an invoice while moving goods for transportation.
This is a sample delivery challan below:
- Declare details of goods transported without delivery challan in e-way bill
- When goods are transported to the recipient, but there is no tax invoice, the supplier should issue a tax invoice after the delivery of the goods.