To overcome the malpractices of fake generation of invoices and fraudulent availment of the inp...
Invoicing under GST is a crucial aspect of tax compliance for every business. The process of creating an invoice is simpler and posting of the tax entry has been simplified. The format of the invoice has been updated, keeping in mind the GST implementation requirement.
Invoicing is a legal document through execution of supply of goods or services and has to be executed during the movement of goods from one place to another. This shall be only possible through a valid invoice or invoice reference, not digitally generated from the GST portal. The GST Invoice format will further play a vital role in recording the sale/purchase of books of accounts. The tax liability, whether its IGST or CGST or SGST, will post in the books of accounts through the proper configuration of invoicing in your accounting software.
The format of an invoice has been defined by notifying GST INV-01 & Subject to rule 7; a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars:
Circumstances when you need to issue a bill of supply:
Under the Vat and CST Act, there was a similar provision for retail invoices and more or less the same concept has been carried in GST laws.
Normal supply of goods – The tax invoice under GST must be issued on or before the removal of goods from one place to another.
Sales on Approval – when goods are sold on sale on approval or a SOR (sales or return), the invoice has to be issued within 6 months from the date of removal of goods or when it is known that the actual supply goods have taken place.
In case of reverse charge liability – on the date of receipt of goods under the reverse charge liability or receipt of goods from the unregistered dealer.
Continuous supply – In case of continuous supply or successive payments are involved, then invoice has to be raised on the receipt of payment.
Original invoice: Under the GST Act, the original invoice has to be issued to the buyer of the goods or services. This is called an original invoice for the recipient. In order to avail input tax credit on the purchase of goods or services, the original invoice must be in the possession of the purchaser.
Duplicate copy: The duplicate copy of the invoice has to be issued for transit to present as evidence when required by the GST officer during the transit movement of goods. The transporter does not require a duplicate copy of the invoice if the supplier of goods has obtained an invoice number from the GST portal.
Triplicate copy: Every supplier under the GST Act has to keep one copy of an invoice for his record and mandatorily obtain a unique invoice number from GST portal for each supply of goods.
Every supplier who supplies taxable goods will have to mandatorily obtain a unique reference by uploading a tax invoice on the GST Portal. This invoice reference number is valid for 30 days, and the invoice reference number can be used for the movement of goods. The requirement of the invoice reference is only applicable in case there is a need of a tax invoice, and in the case a bill of supply of goods, there is no need to obtain an invoice reference number from the GST portal.
Under the GST regime, once an invoice is issued, it cannot be amended or revised only if there is value difference, then it can be settled through a debit or credit note. This is also called supplementary invoice.
Debit note or supplementary invoice – A debit note is to be issued by the supplier of goods or services to increase the taxable value of the original invoice. An input tax credit can be availed by the purchaser for the difference of the tax amount.
Credit note- a credit note is to be issued by a supplier to reduce the taxable value of goods or services or charged on the original invoice. A credit note under the GST Act must be issued on or before 30th September following the end of financial year or before the due date of annual return under the GST Act, whichever is earlier.
Invoicing is one of the most vital aspects to take care of in GST implementation process. Proper invoicing can be only done in case there are proper sales and a purchase order in the system. Every business has to update their software and train existing accounting and taxation departments for the effective implementation of GST. Thus businesses need to make a strong GST implementation plan to ensure proper compliance with GST laws and avoid any loss of input tax credit.