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Invoicing Under GST for Supply of Goods

Ashish M. Shaji

| Updated: Jun 13, 2017 | Category: GST

GST

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.

Format of an Invoice

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:

  • GSTIN
  • Particulars of supplier
  • Particulars of buyer
  • Unique serial number of the invoice
  • HSN / SAC & product details
  • Date of invoice
  • Description of goods and services
  • Total value of supply of goods and services
  • Taxable value of supply of goods and services after trade discount if any
  • GST tax rate (separate break down for SGST, CGST / IGST/UGST)
  • Tax Amount & total payable amount
  • Terms of supply of goods and services
  • Digital signature of taxpayers or its authorized representative

What are the types of Invoicing in the Old Tax Regime? 

  1. Excise invoice – the excise invoice was issued by the owner of the factory or his authorized representative when there was a supply of taxable goods from one premise to other premises with or without a consideration. The invoice was to be issued with details of goods supplied to a registered buyer under the Excise Act or VAT Act. If a purchaser is registered under the Excise Act, he shall be entitled to CENVAT credit for taxes paid on the purchase of goods. If you are only registered under VAT or CST Act, then you will not be able to avail CENVAT of the excise paid at the time of the purchase of goods. The good news in GST Regime is that whatever tax is paid by a registered taxpayer at each stage of supply of goods shall be available for input tax credit.
  2. Vat Invoice / Tax invoice – The Tax invoice or VAT Invoice was to be issued at the time of intra-sate supply of goods to a registered dealer. The VAT paid at the time of purchase of goods by a registered dealer shall be available for input tax credit. Generally, the tax invoice has to be issued at the time of B2B Sale / wholesale supply of goods.
  3. Retail Invoice – The retail invoice was to be issued at the time of B2C sale or sale to an unregistered dealer. Whatever VAT levied on the retail invoice shall not be available for input tax credit under the existing Vat Act and the similar regime has been carried forward under the GST Act.

Invoicing under GST

  • Tax invoice –Under the GST act, when a registered taxable person supplies taxable goods or services to another registered taxable person having GSTIN, he or she can issue a tax invoice as per the format prescribed the GST rule and the registered purchaser can avail the input tax credit paid within 90 days from the date of the purchase of goods. A tax invoice can be issued even at the time of an interstate supply of goods or services. Input tax credits are available on all valid supply of goods and services.
  • Bill of Supply – Under GST the invoicing and tax credits rules is based on the type and format of the invoice at time of the supply of goods or services. The bill of supply is to be issued at the time of B2C supply of goods or services. The bill of supply is generally issued not to restrict the Passover of input tax credit on the supply of goods or services.

Circumstances when you need to issue a bill of supply:

  • At time of retail supply or supply to end consumer
  • When supply of exempted goods or services is exempted from GST
  • Supplier is paying tax under composition scheme

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.

What is the time limit for the issuance of a tax invoice?

  • Supply of goods:

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.

How many copies of invoices are to be issued under GST?

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.

How to generate an Invoice Reference Number from the GST portal?

Every supplier who supplies taxable goods will have to mandatorily obtain a unique reference by uploading a tax invoice on the GST Portal[1]. 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.

How to Revise an Invoice if one is already issued?

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.

Conclusion 

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.

Read our article:Applicability and Impact of GST on Healthcare Services Sector in India

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Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on criminal and corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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