In common parlance, Invoice indicates the amount receivable by the person issuing the invoice from the person to whom the invoice is issued. However invoice used under GST framework is tax invoice which contains statutory details as prescribed under CGST/SGST Act and Rules framed thereunder. Section 2(66) of CGST/SGST Acts, defines Invoice as a meaning assign to under section 31.

IMPORTANCE TAX INVOICE 

Invoice is the most important document in administration of GST. It is primary evidence of supply and all elements on which entire taxation system of GST based. Conceptually GST may be payable on taxable Supply but practically GST is payable on issuing of taxable invoice.

The GST required to be paid throughout the distribution chain of ‘Supply’, on the value addition made at each stage is taxed thus avoiding double taxation. The GST will be paid in full, by utilizing the credit amount of GST already paid by the input supplier and in cash pertaining to the value addition.

The GST system designed to be a self-regulatory system based on strong Information Technology backing. This proposed system will be monitor by way of Invoice Reporting at every stage in the form of Returns GSTR-1, GSTR-2, GSTR-3 etc or rectified in form of returns GSTR-1A, GSTR-2A, GSTR-3A etc.

Invoice is important for determination of GST liability:

Invoice is important for determination of GST liability of taxpayers particularly is important for following purposes:

  1. For determination of address of delivery
  2. For determination of continuous journey of goods or services
  3. For input services distributor’s mechanism;
  4. For determination of time of supply of goods and services;
  5. Application of GST in case of change in rate of tax;
  6. For determination of Value of goods or services;
  7. For taking input tax credit;
  8. Assessment and other proceedings.

Commercial Invoice and Tax Invoice

A tax invoice is similar to a commercial invoice or receipt, however a tax invoice issued in the compliance with GST contains additional details or information as may specified under the GST law. Every registered person who makes taxable supply of goods and services is required to issue a tax invoice in compliance with GST Laws.

For a registered person, tax invoice is necessary to claim input tax credit. Without a proper tax invoice, a registered person and his customers/clients cannot claim ITC incurred on their purchases of taxable goods or services.

  1. STATUTORY PROVISIONS PERTAINING TO INVOICE

The detail provisions pertaining to Invoice are provided in Chapter VII (Section 31-34) of CGST and SGST Act and in Chapter-VI (Rules 46-55) Goods and Services Tax -Invoice Rules.

In general Invoicing doesn’t seem like a big component of a business, but entire seamless credit and control mechanism GST framework revolves around these documents. Taxpayers and department have always different opinion on the contents of an invoice; common mistakes can cost business and revenue significantly. Therefore a clear and unambiguous law and rules are required to govern issuance and other matter relating to invoice.

The matters addressed under these provisions are followings:

1.1 Who will issue tax invoice?

1.2 Time period of issuance of invoices?

1.3 What are the contents and format of invoices?

1.4 What are the manners of issuance of invoice?

1.5 Exemptions to issue invoice, fully or partial.

1.6 Consequences for issue of invoice for the purpose of tax evasion.

2.1 Tax invoice will be issued by Supplier under normal circumstances and by receiver under Reverse Charge:

Tax invoice are generally issued by supplier to recipient, however a registered taxable person who is liable to pay tax under reverse charge mechanism shall issue an invoice in respect of goods or services received by it from a person who is not liable to be registered under the Act, such invoices shall be issue on the date of receipt of goods or services.

2.2 TIME OF ISSUE OF INVOICE:

The Act provided separate guiding principles for goods and services for time frame within which a tax invoice shall be issued, while for the supply of goods, the time of issuance of invoice is provided under GST Acts, for the supply of Services, the time of issuance of invoice is provided under GST Rules,

2.2.1. Time of issue of Tax Invoice in respect of Goods [Section 31(1)]

  1. Where the supply involves movement of goods: Invoice shall be issued before or at the time of removal of goods for supply to the recipient.
  2. Where the supply does not involve movement of goods: Invoice shall be issued before or at the time of delivery of goods or making available thereof to the recipient.

Section 2(96): “Removal’’, in relation to goods, means –

(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier, or

(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient.

(c) Where supply of goods on continuous basis [Section 31(4)]: In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or as the case may be, each such payment is received.

Section 2 (30) “continuous supply of goods”

means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis;

(d) Where the supply of goods on approval basis [Section 31(7)]: Where the goods are removed on the basis of approval, a ‘bill of supply’ issued at the time of removal and Invoice shall be issued after Six month from the date of removal or date of intimation of approval received whichever is earlier. 

2.2.2. Time of issue of Tax Invoice in respect of Services: 

The time of issue of invoice shall, before or after the provision of service but a within a period prescribed in this behalf. [Section 31(2)]

Rule 47 of GST Rules, 2017 prescribed the time limit within which Invoice from date of supply of services will be issued.

Rule 47 provides

The prescribed time, shall be thirty days from the date of supply of service:

In case of continuous supply of services, the prescribe time shall a period of thirty days from the date when each event specified in the contract, in the case of banking and financial services it will be forty five days.

a.Where supply of services on continuous basis [Section 31(5)]

(i) Where the due date of payment is ascertainable from the contract: the invoice shall be issued before or after the payment is liable to be made by the recipient but within a period prescribed in this behalf whether or not any payment has been received by the supplier of the service. [Section 31(5)(a)]

(ii) Where the due date of payment is not ascertainable from the contract: the invoice shall be issued before or after each such time when the supplier of service receives the payment but within a period prescribed in this behalf. [Section 31(5)(b)]

(iii) Where payment linked with completion of event: the invoice shall be issued before or after the time of completion of that event but within a period prescribed in this behalf. [Section 31(5)(c)]

b.When supply ceases before completion of supply: the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of supply effected before such cessation. [Section 31(6)]

2.3 Content of Invoice, Rule 46:

the Invoice shall contain the descriptions, quantity and value and other prescribed particulars. 

Rule 46 of GST Rules, 2017, provides the following an invoice, other than issued by an Input Service Distributors contains the following information:

  1. name, address and GSTIN of the supplier;
  2. a consecutive serial number containing only alphabets and/or numerals, unique for a financial year;
  3. date of its issue;
  4. name, address and GSTIN/ Unique ID Number, if registered, of the recipient;
  5. 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 taxable value of supply is fifty thousand rupees or more;
  6. Harmonised System of Nomenclature code for goods or services;
  7. description of goods or services;
  8. quantity in case of goods and unit or Unique Quantity Code thereof;
  9. total value of goods or services;
  10. taxable value of goods or services taking into account discount or abatement, if any;
  11. rate of tax (CGST, SGST or IGST);
  12. amount of tax charged in respect of taxable goods or services (CGST, SGST or IGST);
  13. place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce;
  14. place of delivery where the same is different from the place of supply;
  15. whether the tax is payable on reverse charge;
  16. the word “Revised Invoice” or “Supplementary Invoice”, as the case may be, indicated prominently, where applicable along with the date and invoice number of the original invoice; and
  17. signature or digital signature of the supplier or his authorized representative.

2.4 Manner of issuance of invoice

Rule 48 of GST Invoice rules provides

Invoice for Goods 

The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner:–

ORIGINAL FOR RECIPIENT;

DUPLICATE FOR TRANSPORTER; and

TRIPLICATE FOR SUPPLIER.

Invoice for Services

The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner, namely,-

  1. the original copy being marked as ORIGINAL FOR RECIPIENT; and
  2. the duplicate copy being marked as DUPLICATE FORSUPPLIER.

The serial number of invoices issued during a tax period shall be furnished electronically through the Common Portal in FORM GSTR-1.

2.5 Exemptions to issue invoice, fully or partial.

A registered taxable person supplying exempted goods and/or services or paying tax under the provisions of section 9 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed.

Bill of Supply: A registered taxable person supplying non-taxable goods and/or services or availing composition scheme shall be exempted from issuing invoice, however, they will require to issue a bill of supply in a prescribed format contains the particulars as prescribed under rule 49 of GST Invoice Rules.

Rule 49 provides a bill of supply shall be issued by the supplier containing the following details:-

  1. name, address and GSTIN of the supplier;
  2. a consecutive serial number containing only alphabets and/or numerals, unique for a financial year;
  3. date of its issue;
  4. name, address and GSTIN/ Unique ID Number, if registered, of the recipient;
  5. HSN Code of goods or Accounting Code for services;
  6. description of goods or services;
  7. value of goods or services taking into account discount or abatement, if any; and
  8. signature or digital signature of the supplier or his authorized representative.

Invoice V/s Bill of Supply

Invoice:

Every registered person shall issue an invoice for supply of:

  1. taxable goods, or
  2. taxable services.

The expression ‘tax invoice” shall be deemed to include Any revised invoice issued by the supplier in respect of a supply made earlier.

Bill of supply

Bill of supply shall be issued in the following cases:

  1. A registered person supplying non taxable goods and/or services, or
  2. A registered paying tax under the composition scheme.

Bill of supply is not required to be issued If the value of the goods and/or services supplied is less than INR 200 except when requested by the recipient.

Responsibility of the taxable person supplying to UN bodies

The taxable supplier supplying to these organizations is expected to mention the UIN on the invoices and treat such supplies as supplies to another registered person (B2B) and the invoices of the same will be uploaded by the supplier.

REVISION OF INVOICE OR OTHER INSTRUMENT IN LIEU OF INVOICE SECTION 31(3)

Section 31(3)deals with various situations where Invoice to be revise or other documents issued in lieu of Invoice.

  1. Section 31(3)(a): Revision of invoice in case of new registration
  2. A newly registered person may revise invoice against the invoices already issued during the period between the effective date of registration and date of issuance of certificate of registration to him. Such revision of invoice shall enable the recipient to take credit of GST charged in the revised invoice.
  3. The registered person may issue a consolidated revised tax invoice in respect of all taxable supplies made to a recipient who is not registered under the Act during such period.
  4. In case of inter-state supplies, where the value of a supply does not exceed INR 2,50,000/-, a consolidated revised invoice may be issued separately in respect of all recipients located in a state, who are not registered under the Act.
  5. The word “REVISED INVOICE”, wherever applicable, indicated prominently;

Contents of the revised invoice: the content of a revised Invoice shall be in accordance with the Rule 53(1) of GST Rules, 2017.

(1) A revised tax invoice referred to in section 31 and credit or debit notes referred to in section 34 shall contain the following particulars, namely:-

(a) the word “Revised Invoice”, wherever applicable, indicated prominently;

(b) name, address and Goods and Services Tax Identification Number of the supplier;

(c) nature of the document;

(d) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(e) date of issue of the document;

(f) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;

(g) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered;

(h) serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;

(i) value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as  the case may be, debited to the recipient; and

(j) signature or digital signature of the supplier or his authorised representative.

Tax invoice is not required for supply less than two hundred: Section 31(3)(b)

For every small sale, a registered person is not required to issue Invoice, a registered person may issue a tax invoice if the value is less than two hundred rupees.

Rule 46 provides that a registered person may not issue a tax invoice for value less than INR 200 subject to the following conditions, namely,-

(a) the recipient is not a registered person;

(b) the recipient does not require such invoice, and

(c) the supplier shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.

Bill of Supply to be issued in the case of Composition levy: Section 31(3)(c)

A registered under composition levy shall issue a bill of supply in the place of tax invoice.

Content of Bill of Supply

Rule 49 of GST Rules, 2017 provides contents of Bill of supply, which is read as under:

A bill of supply referred to in clause (c) of sub-section (3) of section 31 shall be issued by the supplier containing the following details, namely,-

(a) name, address and Goods and Services Tax Identification Number of the supplier;

(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters – hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if  registered, of the recipient;

(e) Harmonised System of Nomenclature Code for goods or services;

(f) description of goods or services or both;

(g) value of supply of goods or services or both taking into account discount or abatement, if any; and

(h) signature or digital signature of the supplier or his authorised representative:

Provided that the provisos to rule 46 shall, mutatis mutandis, apply to the bill of supply issued  under this rule:

Receipt and refund voucher

Section 31(3)(d) provides that on receipt of advance payment, a receipt voucher to be issued, containing such particulars as may be prescribed. Section 31(3)(e) provides that on refund of advance cancellation of existing receipt voucher will not be done but a refund voucher against such payment.

Rule 50 and 51 provides the contents of receipt and refund voucher respectively.

Rule 50. Receipt voucher.– A receipt voucher referred to in clause (d) of sub-section (3) of section 31 shall contain the following particulars, namely,-

  1. name, address and Goods and Services Tax Identification Number of the supplier;
  2. a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;
  3. date of its issue;
  4. name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;
  5. description of goods or services;
  6. amount of advance taken;
  7. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
  8. amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
  9. place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce;
  10. whether the tax is payable on reverse charge basis; and
  11. signature or digital signature of the supplier or his authorised representative: Provided that where at the time of receipt of advance.
  12. the rate of tax is not determinable, the tax shall be paid at the rate of eighteen percent;
  13. the nature of supply is not determinable, the same shall be treated as inter-State supply.

Rule 51. Refund voucher– A refund voucher referred to in clause (e) of sub-section (3) of section 31 shall contain the following particulars, namely:-

  1. name, address and Goods and Services Tax Identification Number of the supplier;
  2. a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;
  3. date of its issue;
  4. name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;
  5. number and date of receipt voucher issued in accordance with the provisions of rule50;
  6. description of goods or services in respect of which refund is made;
  7. amount of refund made;
  8. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
  9. amount of tax paid in respect of such goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
  10. whether the tax is payable on reverse charge basis; and
  11. signature or digital signature of the supplier or his authorised representative.

Payment Voucher in the case of Reverse charge

A registered person, who is liable to pay tax under reverse charge under sec 9(3) or sec 9(4) of the GST Act and sec 5(3) or sec 5(4) of the IGST Act, shall issue an invoice in respect of goods/services received by him from the supplier who is not registered on the date of receipt of goods/services. Such registered person shall also issue a payment voucher at the time of making payment to the supplier.

Rule 52 of GST Rules, 2017 provides for the contents of payment voucher, read as under.

Payment voucher: Rule 52

A payment voucher referred to in clause (g) of sub-section (3) of section 31 shall contain the following particulars, namely:-

(a) name, address and Goods and Services Tax Identification Number of the supplier if registered;

(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and Goods and Services Tax Identification Number of the recipient;

(e) description of goods or services;

(f) amount paid;

(g) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);

(h) amount of tax payable in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);

(i) place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce; and

(j) signature or digital signature of the supplier or his authorised representative.

2.6 Penalty for Wrong Invoicing 

if supplier supplies goods/services without issue of invoice or issues invoice without supply of goods or issues incorrect invoice or false invoice or issues invoice using GSTIN of another supplier, then penalty of Rs. 10,000 or the amount of tax evaded shall be payable, also, prosecution provisions are attracted in case of false invoicing as per section 92.

  1. Credit and Debit Notes: 

Issue of Debit or Credit notes are issued frequently in the course of day to day business, under GST they can be issued only in certain circumstances. Credit Note cannot be issued on account of renegotiation of prices after supply. Only debit or credit notes related with supply and invoices are relevant for GST purposes.

Where a tax invoice is found to exceeds the taxable value and/or tax payable in respect of a supply, in such situation a credit note will required to be issued, in other hand Where a tax invoice is found to less the taxable value and/or tax payable in respect of a supply, in such situation a credit note will required to be issue.

Circumstances when a debit or credit notes are issued:

(1) Where a tax invoice has been issued for supply of goods and/or services, and 

  1. the taxable value and/or tax charged in that tax invoice is found to exceed the taxable value or tax  payable in respect of such supply; or
  2. where the goods supplied are returned by the recipient; or
  3. where services supplied are found to be deficient,

under the above circumstances the registered person, who has supplied such goods and/or services, may issue to the recipient a credit note.

(2) issue to the recipient a credit note.

Such notes shall be issue on or before the thirtieth day of September following the end of the financial year in which such supply was made, or the date of filing of the relevant annual return, whichever is earlier.

A credit or debit note under section 34 shall contain the following details –

  1. name, address and GSTIN of the supplier;
  2. nature of the document;
  3. a consecutive serial number containing only alphabets and/or numerals, unique for a financial year;
  4. date of issue of the document;
  5. name, address and GSTIN/ Unique ID Number, if registered, of the recipient;
  6. 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;
  7. serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;
  8. taxable value of goods or services, rate of tax and the amount of the tax credited or, as the case  may be, debited to the recipient; and
  9. signature or digital signature of the supplier or his authorized representative.
  10. Tax invoice in Special Cases

4.1 Invoice issued by Input Service Distributors (ISD): A tax invoice issued by an ISD shall contain the following details:-

(a) name, address and GSTIN of the Input Service Distributor;

(b) a consecutive serial number containing only alphabets and/or numerals, unique for a financial year;

(c) date of its issue;

(d) name, address and GSTIN of the supplier of services, the credit in respect of which is being distributed and the serial number and date of invoice issued by such supplier;

(e) name, address and GSTIN of the recipient to whom the credit is distributed;

(f) amount of the credit distributed; and

(g) signature or digital signature of the supplier or his authorized representative:

An ISD of a banking company or a financial institution including a NBFC is exempted from mentioning serial number, however, it shall contains all other information mentioned above.

4.2 A banking company or a financial institution including an NBFC, is exempted from mentioning serial number and the address of the recipient of taxable service, it has to mention all other information as prescribed in rule 46 of GST Invoice Rules.

4.3 A Goods Transport Agency (GTA) will require to mention the following information alongwith the information as provided in Rule 46 of GST Invoice Rules:

  1. Gross weight of the consignment,
  2. Name of the consignor and the consignee,
  3. Registration number of goods carriage in which the goods are transported,
  4. Details of goods transported,
  5. Details of place of origin and destination,
  6. GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency,

4.4 Passenger Transportation Service providers will issue a tax invoice which includes Ticket in addition to the information as required under Rule 46 of GST Invoice Rules.

  1. Uploading of Invoices
  2. Uploading of Invoice depends upon whether B2B or B2C plus whether Intra-state or Inter-state  supplies.
  3. For B2B supplies, all invoices, whether Intra-state or Interstate supplies, will have to be uploaded. The uploading of all B2B invoices necessary because ITC will be taken by the recipients, invoice matching is required to be done.

In B2C supplies, uploading in general may not be required as the buyer will not be taking ITC in such cases a consolidated Invoice will be prepared by the tax payer for all B2C supplies for the purpose of uploading. Further intra-state invoices below Rs. 2.5 lacs and all intra-state invoices, state wise summary will be sufficient.

  1. In order to implement the destination based principle, invoices of value more than Rs.2.5 lacs in inter-state B2B supplies will have to be uploaded.
  2. Description of item in the invoice

The description will not require to be uploaded in the form GSTR-1. Only HSN code in respect of supply of goods and Accounting code in respect of supply of services will have to be uploaded. The minimum number of digits that the filer will have to upload would depend on his turnover in the last year.

 

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Writer

Sahay Vineet