GST

GST Invoice – Invoicing Under GST

GST Invoice, Debit and Credit Notes are discussed under Chapter VI of CGST rules, 2017.

What is GST Invoice?

Invoice means tax invoice that is issued by the registered person whilst making a taxable supply. It contains the list of goods or services along with the due for payment. GST Invoice formats are a crucial factor while considering the implementation of GST in India. If you sell a product or render services, then you can only execute a business transaction by issuing invoices to your customers, whether you operate the business online or offline. As per GST laws, every supplier has to issue an invoice in the pre-notified format, while supplying goods or services from one place to another place.

Contents of GST Invoice

GST Invoice must contain the following information:

• GSTIN
• S.N of invoice (Example EBS100)
• Product name
• Product description
• HSN Code / SAC
• Quantity
• Details of supplier
• Details of purchaser
• Details of trade discount
• Terms of supply
• GST Rate (IGST, CGST, SGST/UGST)
• Taxable value and discounts
• If GST is payable on reverse charge basis
• Signature of supplier

Invoice- GST Law

As per the GST rule based on an invoice, the seller and buyer will maintain their accounting books. The input tax credit can be claimed only if the purchaser has a valid tax invoice. A tax invoice will ensure the correct tax posting in heads like IGST, CGST, SGST/UGST. It will be automatically done through the proper configuration of tax heads in the billing system of a company. Under each tax heads, the system has to maintain a separate ledger for Output GST, Input GST, and a cash ledger. When there is a statutory audit, the auditor will able to conduct sample test of the invoicing systems adopted by a taxpayer. Based on the invoice posting, further accounting software will generate trial balance, profit and loss, and a balance sheet.

Objective of GST

After the rollout of GST by the appointed date 1^st July 2017, in our opinion, GST is not only a tax reform; this is going to be a major business reform in India. The impact of GST is expected on the overall economy in terms of price reduction for essential products and as well the revenue of the states will increase. GST is a destination based tax. Transaction reporting has been defined and means every single invoice has to upload by the taxpayers on the GST portal^[1].

With the implementation of GST in India, the state and central government has a mission of one nation one taxation system. This will bring transparency in the taxation system for the taxpayer, tax authorities, and tax professionals.

Format of Invoice

As per the GST Act, a taxpayer will have to issue either a tax invoice or bill of supply for goods or services.

You may find here a format for GST invoice for the supply of goods and GST and an invoice format for the supply of services along with necessary details as defined in rule 7 and section 31 of GST act.

Time limit for issuing tax invoice

The GST Act has defined the time limit for issuance of GST tax invoices, revised tax invoice, debit notes, and credit note. The time limit has been defined separately for goods and services.

• For supply of Taxable Services

The tax invoice has been defined in rule 1. In case of the supply of services invoice by other bank or Insurance Company or financial institution, it has to be issued within a period of 30 days from the date of supply of service and in case supplier of service is an NBFC or bank, the invoice has to be issued with 45 days from the date of supply of service.

• For supply of Taxable Goods

The invoice has to be issued before the actual movement of goods from one place to another. GST laws have a well defined time limit for the issuance of an invoice, supplementary invoice debit notes i.e. In the normal business case, the tax invoice under GST has to be issued by a taxable person having GSTIN on or before the time when goods are removed from one place to another.

What is a bill of supply?

A bill of supply under GST has been defined, in clause (c) of sub-section (3) of section 31 of the GST Act. This is an alternative to a regular tax invoice that can be issued only in special circumstances, whereas a tax invoice either cannot be issued or it is not permitted by the GST law. A tax invoice under GST is issued to charge the tax and allow the benefits of input tax credit to the purchaser. In GST in few circumstances, whereas a taxable supplier is not allowed to issue a tax invoice, a bill of supply can be issued. If you supply exempted goods or services, then you cannot issue a tax invoice and if in case you are registered under a composition scheme, then to you cannot issue a tax invoice, hence as an alternative to executing a transaction, a bill of supply under GST has to be issued with all details as prescribed by the GST rule.

Difference between Tax Invoice and Bill of supply under GST

• Tax invoice is issued by registered supplier providing taxable services or providing taxable goods whereas a bill of supply is issued by supplier of exempted goods or supplies by person who is registered under composition scheme;
• In tax invoice CGST, IGST and SGST has to be shown separately but in case of bill of supply no taxes is required to be shown;
• Input tax credit can be claimed based on tax invoice by the recipient but as suppliers are not eligible to issue tax invoice therefore there is no question of claiming input tax credit.

What is a Supplementary Tax Invoice and Credit or Debit Notes?

The supplementary tax invoice has been defined under section 31 of the GST Act. A supplementary invoice is to be issued when an earlier issued invoice falls shorter than the actual taxable value. Further debt and credit notes have been defined under section 34 of the GST Act.

A supplementary invoice is to be issued after the original tax invoice has been issued and thereafter if the actual invoice exceeds/falls shorter than the actual taxable amount. In such circumstances, the taxable supply of goods or services can issue a debit or credit note respectively. A supplementary tax invoice is to be issued by the taxable person to rectify the deficiency in the earlier issued tax invoice. In common language, a debit note is also called a supplementary invoice. In a supplementary invoice, it is mandatory to give a reference number of the earlier issued invoices number, issued under the GST Act.

Rule 8(2) under Chapter VI of CGST Rules, 2017 provides relaxation from separate revised invoice requirement. In case a taxable person is engaged in the inter-state supply of goods and services, where the value of supply is less than R.s. 2.5 Lac. Then one consolidated revised invoice can be issued with respect to all purchasers located in a state who are not registered under the GST Act.

Conclusion

It may be noted that under GST laws penalty may be levied for not issuing GST Tax invoice. Therefore it must be issued by the registered person whilst making a taxable supply.

Read our article: Checklist of Different Types of Reviews / Audit in GST