In common trade, a tax invoice is a legal document that records a transaction between a buyer and seller. Under GST law, an invoice or tax invoice means a tax invoice as referred to in section 31 of the Act. This article attempts to decode the provisions related to tax invoice under GST for better understanding.
Introduction to Tax Invoice under GST law
Every registered person, under GST law, is mandated to issue a tax invoice while making an outward supply of goods or services. However, it is not mandatory that only a person effecting outward supplies has to issue a tax invoice. For instance, a registered recipient, liable to pay tax in case of reverse charge, has to issue a tax invoice (generally known as self- invoice) and a payment voucher to unregistered supplier. Further, a registered supplier is not required to issue a tax invoice to unregistered supplier in case the value of goods or services does not exceed Rs. 200. The government has notified various rules prescribing the particulars such as description, quantity and value of goods to be shown on the invoice.
Importance of Tax Invoice
The necessity of issuing an invoice under GST arises from the provisions of the act itself.
- It is an important document to be kept in records for a registered person to avail input tax credit.
- It broadly determines the time of supply for goods or services determining the point of time when GST is chargeable.
Time of Issue of Tax Invoice
|
Situation |
Time |
|
Where the supply requires moving goods from one place to another |
Before or at the time of removal of goods |
|
Where no movement of goods is required even though goods are moveable in nature |
Before or at the time of delivery of goods |
|
Services (except in case of insurer/ banking company/ Financial institution including NBFC) |
Before or after the provision of services but within 30 days of supply (45 days for insurer/ banking company/ Financial institution including NBFC) |
|
For continuous supply of goods |
Before or at the time of issuance of successive statements or payments |
|
For continuous supply of services |
Where due date is ascertainable – before or on the due date of payment Where due date is not ascertainable- before or on the receipt of payment by the supplier |
|
Goods sent on approval basis |
Before or at the time of supply or 6 months whichever is less. However, at the time of removal a delivery challan must be issued. |
|
Goods sent on SKD/ CKD conditions/ batches/lots |
Complete invoice to be issued before the movement of first consignment and thereafter, a delivery challan with every movement of goods. |
Bill of Supply
The law provides for provision to issue a bill of supply by a registered supplier in lieu of tax invoice under special conditions. As opposed to tax invoice fewer details are required to be mentioned in the bill of supply. Cases where a bill of supply is required to be issued are:
- The person is registered under composition scheme and is not charging tax on the bill of supply
- A registered person supplying wholly exempted goods/ services.
Further, if a registered person is making taxable and exempted supplies, both, to an unregistered person, he can issue invoice- cum- bill of supply instead of a tax invoice.
Particulars of a Tax Invoice
As per Rule 46 of CGST rules, the following particulars must be shown on a tax invoice:
- name, address and GSTIN of the supplier
- a consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters and any combination thereof, unique for a financial year
- date of its issue
- name, address and GSTIN or UIN, if registered, of the recipient;
- name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered and where the value of taxable supply is fifty thousand rupees or more;
- HSN code of goods or Accounting Code of services as notified by government:
|
Annual Turnover in previous year (in Rs.) |
HSN requirement |
|
upto 1.5 crore |
Not required |
|
>1.5 crore, <= 5 Crore |
Upto 2 digits |
|
> 5 Crore |
Upto 4 digits |
- description of goods or services
- quantity in case of goods and unit or Unique Quantity Code thereof
- total value of supply of goods or services or both
- taxable value of supply of goods or services or both taking into account discount (trade or otherwise) or abatement, if any
- rate of tax
- amount of tax charged
- place of supply along with the name of State
- address of delivery where the same is different from the place of supply
- whether the tax is payable on reverse charge basis
- signature or digital signature of the supplier or his authorized representative
Manner of Issue
|
In case of Goods- Triplicate |
In case of Services – Duplicate |
|
Original Copy – “Original for Recipient” |
Original Copy – “Original for Recipient” |
|
Duplicate Copy- “ Duplicate for Transporter” |
Duplicate Copy- “ Duplicate for Supplier” |
|
Triplicate Copy – “Triplicate for Supplier” |
|
Revised Tax Invoice
In case, the effective registration date i.e. when the person is liable to be registered under GST is different from the grant of registration certificate, the law provides for issuance of revised tax invoice. This provision smoothens the availability of input tax credit for the supplier. However, it is emphasized that it is not a provision to correct errors in an already issued tax invoice.
Other Documents in Special Situations
|
Situation |
Document to be issued |
|
In case of an advance receipt |
Receipt Voucher Ø In case tax is not ascertainable at the time of supply: tax rate should be assumed to be 18% and supply should be considered as inter- state supply |
|
In case a receipt voucher needs to be reversed |
Refund Voucher |
|
Under Reverse Charge |
A self- invoice and payment voucher by the registered recipient of services to the unregistered supplier |
|
When taxable amount of supply needs to be reduced or in case the recipient returns the goods |
Credit Note |
|
When taxable amount of supply needs to be increased |
Debit Note |
|
Transportation of goods for Job work |
Delivery Challan |
|
Supply of liquid gas |
Delivery Challan |
|
Supplier supplying passenger transportation service |
Ticket even though it may not include address of the recipient |
|
Admission to cinema halls |
E- ticket even though it may not contain the details of recipient |
Please note these documents do not override the need of issuing tax invoice whenever supply of goods or services or both takes place.
HSN code on Invoices
Notification No. 78/2020-Central Tax dated 15th Oct 20, deals with Disclosure of HSN code on GST Invoices.
The New disclosure rules are effective from 1st April 2021.
|
Annual Turnover in previous year (in Rs.) |
HSN requirement |
|
below Rs. 5 crore |
4 digits (Not required for B2C invoices) |
|
Above Rs. 5 Crore |
6 Digits |
Updates & Notifications
| Update/Notification No. | Details |
| Amendment in section 16(4) | The date of issuance of debit note is delinked from date of issuance of the underlying invoice for the purpose of availing input tax credit |
| Amendment in section 31(2) | A new proviso is substituted in place of old one |
Conclusion
It is seen that even though invoicing is an everyday activity for a supplier of goods or services, invoicing under GST requires consideration. Only with the help of better understanding, a complete and legal invoice is generated which helps a taxpayer in availing input tax credit and complying the requirements of law.
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Assume company X is having 2 GSTNs (one at Telangana and another one at Maharashtra).
It purchased goods from a company Y in Tamilnadu in April 2020.
The company Y mentioned Maharashtra address and GSTN on the bill erroneously instead of Telangana address and GSTN (actually goods delivered to Telangana).
In that case can company Y send revised invoice to company X by changing the billing address and GSTN from Maharashtra to Telangana…
Please suggest…
They can cancell the original invoice by debit/credit note and issue a new invoice of current date with correct details.