GST Invoice: An invoice, which is also referred to as a GST bill, is a record of goods sent or services rendered, i.e., all business transactions held between both parties, along with the amount due for payment. The details include the product name, description, quantity, details of the supplier, purchaser, the rate charged, discounts, terms of sale, etc.
GST invoice is of utmost importance because all other documents such as trial balance, P&L A/C and balance sheet are dependent on it for their respective updations.
A purchaser is eligible for claiming the input credit if and only if their GST invoice is duly updated and maintained in an orderly manner.
It is expected that every individual or organization will issue a GST invoice for any amount, but as per GST Act [Sec 31(3) (b)], there is no requirement for issuing a tax invoice when the value of the goods or services supplied is less than INR 200, under the following circumstances-
- If the concerned person is unregistered and
- If the concerned person does not require an invoice.
Notwithstanding, if the recipient mandatorily needs the Invoice, it must be issued irrespective of its amount.
What are the HSN Codes, and How is it Incorporated in the Invoice?
It has been compulsory from 1st April 2021 to mention the HSN Code in the GST invoice.
All the tax invoices should contain HSN digits, describe goods and tax rates specifically for better transparency, and avoid future litigations.
HSN Code is used for classification purposes in over 200 countries.
It is an internationally approved procedure to increase unanimity.
As per the HSN code system, goods have been grouped into a total of 97 different chapters.
The HSN is six digits long.
In the HSN code chapter, the heading of the goods and the sub-heading of the goods are represented respectively by the first two digits of the HSN code, the third and fourth digit of the HSN code and the fifth and sixth digit of the HSN code.
As per Notification No. 12/2017 – Central Tax dated 28th June 2017, the concerned person must show the HSN code on the Invoice as per the following established guidelines:
- Any person or organization owning less than Rs.1.5 crores annual turnover in the earlier business year will not be needed to display the codes on the Invoice.
- Any person or organization possessing Rs.1.5 crores to Rs.5 crores yearly turnover in the past financial year will be required to demonstrate the first two-digit of the HSN code on the Invoice.
- Any person or organization possessing more than Rs.5 crore as annual turnover in the preceding financial year should display the first two-digit and chapter heading of the HSN code on the Invoice. Therefore, to put it simply, only entities having more than Rs.5 crore of annual turnover will have to certainly display four digits of the codes as displayed in the Invoice.
When you are listing monthly GSTR-1, one will have to notify the HSN details in April month’s GSTR-1, which is to be filed in the month of May 2021.
Similarly, for filing quarterly GSTR-1, one needs to supply the details at four digits in April to June’ 21’21, GSTR-1, which is to be registered in July 2021.
With this change, one needs to state the HSN code at 6/4 digits mandatorily in the HSN summary, i.e., table 12 of GSTR-1. The “total value” in the HSN summary is replaced with “Rate of Tax”, meaning you need to furnish HSN-wise rate-wise details now.
There is also a fine of Rs. 50,000 for committing a mistake related to this particular scenario under section 125 of the GST.
Invoice Under GST in Case of Sales of Goods
The tax invoice under GST is sanctioned on or prior to removing goods from one place to another.
While goods are marketed on sale on approval or a SOR (sales or return), the concerned organization should declare the Invoice within six months from the day of departure of goods or when it is made sure that the actual supply goods have taken place.
When reverse charge liability is relevant, the Invoice is required to be issued on the date of receipt of goods or receipt of goods from the unregistered dealer.
If continuous supply or subsequent payments are involved, then the Invoice has to be raised on the receipt of payment.
Under the GST Act, the original Invoice is assigned to the purchaser of the goods or services, which is referred to as an original invoice for the recipient.
To be able to access the input tax credit on the purchase of goods or services, the original Invoice must have the purchaser.
The duplicate copy of the Invoice must be issued for transit to present as evidence when required by the GST officer during the transit movement. There is no need for a duplicate copy for the Transporter if the seller or provider of goods has received an invoice number from the respective GST portal.
Every wholesaler registered under the GST Act is assumed to keep one copy of an invoice for their account and mandatorily obtain a unique invoice number from the GST portal for each stock of goods.
Invoice Under GST in Case of Providing Services
A registered person supplying taxable services before or subsequent to the provision of service but within a designated period is expected to issue a taxable invoice.
As per Section 31 of CGST Act 2017, for tax invoice to be deemed valid, it should definitely have the following details
- The description of the service
- Value
- Tax charged thereon and
- Other particulars deemed to be essential
To summarize, a tax invoice must be issued at the earliest of any of the following time periods:
- Before the Terms of Service, or
- Inside 30 workdays from the terms of service
The original Invoice is assigned to the receiver. A buyer is entitled to the first Copy of the Invoice, which is identified as “Original for Recipient”.
The duplicate copy is booked for the supplier and is marked as “Duplicate for supplier”.
Specifics That Should Be Listed In The Tax Invoice
As per CGST Rules, 2017, the tax invoice issued must mention Information under the following 16 headings:
- The Name, address and GSTIN of the supplier
- Unique Tax Invoice number
- Day of issue
- The name, residential location and GSTIN of the recipient
- In case the recipient is not enrolled, and the amount surpasses Rs. 50,000, then the Invoice should contain:
- particulars of the recipient (name and address)
- address of delivery along with the state name and state code
- The HSN code of goods or accounting code of services as applicable
- Description of the goods or services or both (as applicable)
- Number of goods and unit or Unique Quantity Code
- The cumulative cost of the amount of goods/services or both
- The assessable value of the stocks of goods or services or both considering exemption or reduction, if any
- The appropriate percentage of GST
- Amount of tax applied (explicitly mentioning the division of amounts as per the rates of CGST, SGST, IGST, UTGST and cess)
- Area of supply along with the name of target state for inter-state transactions
- Transportation location in case it is different from the place of supply
- If GST can be adjusted on a reverse charge principle
- Signature of the supplier or their authorized representative
As per Rule 36(2) of CGST Rules, an enrolled individual or company shall be able to avail of input tax credit solely if one condition is met, i.e., all the relevant items are included in the stated document.
However, there are exceptions as well. If the said document does not have the specified papers but contains any of the following:
- The tax value which has been charged
- The description of goods sold or services used
- The total rate of supply of goods or services, or both as applicable
- GSTIN of the supplier and receiver
- Location of supply for inter-State supply
Such registered person may avail input tax credit.
Therefore, in case all of the relevant details are missing from a GST invoice, the ITC (Input Tax Credit) claimed on that Invoice must be reversed.
Mode of Publishing the Invoice
GST is issued either in triplicate or duplicate form based on the type of business or the supply of goods or services.
Case 1: Supply of Goods
- “Original for Recipient” is stamped on the Invoice issued by the consumer or receiver of the goods.
- The Duplicate copy that is assigned for the Transporter is labelled as “Duplicate for Transporter”
- The supplier maintains the triplicate copy, which is recorded as “Triplicate for Supplier.”
Case 2: Supply of Services
- “Original for Recipient” is printed on the Invoice allotted to the receiver of the relevant services.
- Duplicate Invoice is preserved by the supplier and is marked “Duplicate for Supplier.”
Revision of Invoices Issued before the Issue of Registration Certificate
There are always rooms for error.
Filing a GST invoice requires many scrutinies and even the smallest iota of negligence results in a wrongly printed Invoice. For such situations, a revision with the appropriate changes is necessary for the invoices.
All the modifications must be in accordance with the monthly returns. Few of the ways in which one can make the required modifications are as follows:
- The downward revision in prices of goods or services that are supplied,
- Upward revision in prices of goods or services that are provided,
- Change in the tax rate of the GST, and many more.
An upward revision can be carried out through a supplementary Invoice. Furthermore, one can do the downward revision using a credit note.
There may also be occasions where the Invoice might need a complete revision. Under such circumstances, a “revised” invoice is allotted.
In the present GST law, the government has not elaborately defined the updated invoices separately. Currently, all the enrolled taxpayer has the provisional GSTN ID Number.
After finishing with the basic conventionalities, the taxpayers will be given a formal registration number in the GST. The taxpayer having the invoices from the roll-out of GST until they get the standard GST ID number must issue a ‘revised’ invoice mandatory.
The Invoice must be in terms of the GST and must be mandatorily issued within 30 days from the date of the receipt of the original registration certificate.
Is There a Deadline for Issuing GST Invoices?
Yes, there is a specific deadline within which the GST bills have to be issued. Mentioned below are the time limits.
- The GST invoice has to be published on or prior to the day of delivery or removal for goods supplied.
- The GST tax invoice for the services provided must be released within 30 days of the service being rendered.
- If banks or financial institutions have provided any assistance, the valid GST invoice must be issued within 45 days of providing the service.
Bill of Supply as Contrary to Tax Invoice
As per Sec 31(3)(c) of CGST Act 2017, a listed individual or company supplying exempted products or services or both or paying tax under the terms of section 10 shall publish a bill of supply containing such specifications and, in such manner, as prescribed.
Thus, as per the combined version of the GST Act with GST guidelines, the Bill of Supply is to be issued by a registered supplier under the following heads:
- In case of the supply of exempted goods or services
- If the supplier is giving tax under a composition system
Like a tax invoice, a bill of supply need not be issued when the value of goods or services supplied is less than INR 200 unless the receiver insists on the bill.
Nevertheless, a consolidated supply statement should be maintained at the end of each business day pertaining to such supplies for which the bill of supply is not allotted.
However, the composition taxable person should not write the phrase “Composition taxable person, not eligible to collect tax on supplies” at the head of the supply bill.
Transportation of Goods Utilizing a Delivery Challan
Delivery challan is a certificate that is necessary to transport goods from one place to another when the transaction does not fall under supply under GST.
To make the difference between an invoice and a challan more detailed – an invoice is a bill of the sale-purchase transaction between seller and buyer in contrary to delivery challan, which is a note rendered by the dealer to the recipient about the transfer of goods and the status of the goods being dispatched without adjustment of GST.
A Delivery challan is issued for delivery of goods under the following situations:
- Supply of liquid gas when the quantity is not known to the supplier
- Shipment of goods for job work
- Shipment of goods when the transaction is not considered for tax invoice
- Other supplies as and when notified by the concerned authorities
Following are the Cases Where GST Delivery Challan is Must for the Transportation of Goods-
- Whether supplies are shipped or taken inside or outside the State on clearance for sale or return and are withdrawn before the supply, a Delivery Challan must always be issued at the departure time.
- Painters deliver their pieces of art to different galleries for presentation and auction purposes. If the artwork is bought, every individual agency can move the paintings with a delivery challan from one gallery to another within or outside of the State.
- If the items are being shipped out of India for an auction or on a consignment basis, per the CBIC Circular No. 108/27/2019-GST issued 18.07.2019, none of these exports is considered to be ‘supply’ or ‘export’ in nature. Such exports will be categorized for issuance of a Delivery Challan.
- When products are delivered in several vessels, the retailer can issue the full Invoice until the first contract is delivered. For any of the sequential consignments, a delivery challan must be incorporated and a referral to the Invoice.
- When one could not give the tax invoice at the time of the goods’ departure if delivered to the receiver, the need for delivery challan rises. The distributor will issue a tax invoice after transporting goods, per Rule 55(4) of the CGST and SGST Rules, 2017.
Delivery challans under GST must be in triplicate, according to Rule 55 (2) of the CGST Rules:
- The buyer’s original copy must be labelled as ORIGINAL FOR CONSIGNEE.
- DUPLICATE FOR TRANSPORTER should be written on the duplicate copy for Transporter.
- The seller’s triplicate copy should be labelled TRIPLICATE FOR CONSIGNER.
Designing the Tax Invoice In Accordance With The Demands Of An Organization
Organizations can make their GST tax invoices distinct and recognizable. Organizations can personalize GST bills in the following ways:
- It is possible to add the company’s logo, issuing the Invoice for clear brand recognition.
- The required authorized signatory field must be positively mentioned.
- Additionally, the name and address details of the issuing company can be specified on the official letterhead.
Companies are expected to obey these GST tax invoice requirement rules.
By implementing these rules, companies can guarantee that their GST bills are tax compliant and legitimately authentic.
The enforcement of the GST Act has made it obligatory for catalogued dealers to follow the necessary GST tax format, rules, and regulations.
It is advised to take note of these rules so that suppliers maintain them and do not default by providing any irrelevant or wrong information. Following the proper GST tax invoice requirements keeps the entire business transaction smooth and modernized and assures no legal troubles in the long run.