GST - What's in an Invoice? A surprising lot
Note: This article is a little different from our usual articles which usually tries to simplify tax, accounting and finance jargon. This one contains reference to a lot of provisions. Feel free to skip this article if you don't want to deal with such jargon. Our usual posts will continue. Stay tuned for those.
Background
Generally, invoice is a commercial instrument issued by the seller to buyer against supply of goods or services. It’s an important document under GST. It not only evidences supply of goods or services but is also essential for the determination of time of supply. GST law has mandated for a registered person to claim input tax credit only on the basis of the Invoice issued u/s 31 of CGST and debit note issued u/s 34 of CGST Act. Therefore, an invoice, among other documents, is required to be issued for every form of supply such as sale, exchange, transfer, barter, lease, rental, license or disposal.
Tax invoice u/s 31 of CGST Act 2017 can only be issued by the registered person as Section 32 of CGST Act 2017 specially prohibits collection of tax by unregistered person.
Invoice under GST
This section mandates issue of invoice or bill of supply for every supply of goods or services. However, an invoice or a bill of supply need not be issued by Registered person if the value of the supply is less than Rs. 200/-, subject to specified conditions.
Note: It also include a Revised Tax invoice issued under this act.
Timeline for the issue of Invoice:
Important point to consider: An invoice or a bill of supply need not be issued if the value of the supply is less than Rs.200/-, subject to specified conditions.
Particulars of Tax invoice
Tax Invoice to be issued by Registered person must contain following particulars as required by rule 46 of CGST rule:-
Name, address and GSTN of the Supplier
Invoice number and date of issue
Name, address and GSTIN or UIN of the recipient- if registered
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 and where the value of taxable supply is fifty thousand rupees or more
HSN code
Description of goods or services
Quantity in case of goods and unit or Unique Quantity Code thereof
Total value of supply of goods or services
Taxable value of supply of goods or services taking into account discount or abatement
rate of tax (central tax, State tax, integrated tax, Union territory tax or cess)
amount of tax charged (central tax, State tax, integrated tax, Union territory tax or cess)
place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce
address of delivery where the same is different from the place of supply
whether the tax is payable on reverse charge basis
the word “Revised Tax invoice” or “Supplementary invoice” to be indicated prominently, wherever applicable along original invoice no and date.
Signature or digital signature of the supplier or his authorized representative.
Team Galactic - If this is too much information for you to read, we've created a sample invoice format for you to download -
Some invoice details are not required for the following suppliers particulars are exempt for specified supplier from the above provision as below:
In case of export, the tax invoice shall carry en endorsement
- “Supply meant for export/Supply to SEZ or SEZ Developer on payment of IGST” or
- “Supply meant for export /Supply to SEZ or SEZ Developer under Bond without payment of IGST”.
However invoice must contain the name of the country of destination in lieu of the State name & State code.
Manner of issue of Tax invoice
The tax invoice must be prepared in triplicate for goods, and in duplicate for services. Each copy of the tax invoice is required to be marked as follows:
Circumstances where Registered person cannot issue a tax invoice:
Where both taxable as well as exempted supply are effected to an Unregistered person by a Regd. Person, single ‘Invoice-cum- bill of supply’ instead of ‘tax invoice’ may be issued. {Rule 46A of CGST inserted vide N No.45/2017}.
Multiple series of invoices allowed under GST
It may be issued provided all the series of tax invoice are reported in Form GSTR-01.
HSN code in invoice
The Harmonised System of Nomenclature (HSN) code for goods or services that a class of registered persons shall be required to mention is as follows as per notification no 12/2017 – Central Tax dated 28th June, 2017:
*Annual turnover: Turnover in the State as defined in Section 2(112) of the Act, computed for the preceding financial year.
Special declaration
Special declaration containing the words “INPUT TAX CREDIT NOT ADMISSIBLE” to be made where any invoice has been issued in pursuance section 74/129/130 of CGST Act.
Discount
Discount provided before or at the time of supply must be reflected on the face of the tax invoice
Bill of Supply
A bill of supply is document which is issued in lieu of a tax invoices. It may be issued in following cases:
- where it is not mandatory for the supplier to issue an invoice, a bill of supply can be issued.
- In the case of supply of non-taxable goods
- Where GST is paid under composition scheme.
Contents of bill of supply:
Name, address and GSTN of the Supplier
Invoice number and date of issue
Name, address and GSTIN or UIN of the recipient- if registered
Description of goods and services
HSN code
Taxable value of supply of goods or services taking into account discount or abatement
Signature or digital signature of the supplier or his authorized representative.
Relaxation to issue Bill of supply under GST
If value of supply is less than Rs. 200 subject to condition that
(a) the recipient is not a registered person; and
(b) the recipient does not require such bill of supply,
and he shall issue a consolidated bill of supply for such supplies at the close of each day in respect of all such supplies.
Credit & Debit Notes
Credit Notes
Generally it’s issued by the person who owes money. However as per section 34 of the CGST Act, it’s issued when:
- The taxable value on which the tax is collected is more than the actual taxable value;
- The tax charged is more than what should have been charged;
- The recipient has returned the goods or
- goods or services or both supplied are found to be deficient.
Note:
- It must be linked to specific original tax invoice
- Credit note will include a supplementary invoice.
- It cannot be issued for bad debts cases.
- credit note issued for a discount, the discount must be provided in terms of an agreement entered into before or at the time of supply, as provided in Section 15(2) of the Act.
Reduction in tax liability subject to unjust enrichment: A credit note cannot be issued if the incidence of tax and interest on such supply has been passed by him to any other person
Time limit for issue of credit note: It must be issued and declared in a return for the month during which such credit note has been issued but not later than:
- September following the end of Financial Year
- before filing of the annual return for that Financial Year
- Whichever is earlier.
Debit Notes
Generally, Debit note is issued when any money is ‘OWED’ to the issuer. However as per section 34 of the CGST Act, it’s issued when:
- Actual value of supply is higher than that stated in the original tax invoice;
- Tax charged in the original tax invoice is lower than that applicable on the supply;
- The debit note needs to be linked to the original tax invoice(s);
Note:
- It must be linked to specific original tax invoice
- Debit note will include a supplementary invoice.
Time limit for issue of credit note:
No time limit has been prescribed for issuing debit notes however it has to be shown in the return for the month in which such was issued.
Revised Invoice
In terms of Rule 53 of CGST Rule, It is to be issued for all taxable supplies
- effected for the period starting from effective date of regn till the date of issuance of certificate of registration or
- made to a unregistered person or
- in the case of interstate supplies to unregistered person where value of supply does not exceed Rs. 2.50 Lakh.
Delivery Challan
A delivery challan,in terms of rule 55 of CGST Rule, is required to be issued by a registered person every time he moves any goods for any reasons other than by way of supply (say supply for job work, goods sent for sale on approval basis, dispatch of demo-goods, disposal by way of gift or free samples, shipment of goods for an exhibition, etc.)
Where goods are being transported on a delivery Challan in lieu of invoice, the same shall be declared in Form E-way bill.
It’s to be issued for the following purpose:
supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known,
transportation of goods for job work,
transportation of goods for reasons other than by way of supply, or
such other supplies as may be notified by the Board,
Manner of issuing delivery Challan:
Original for Consignee
Duplicate for Transporter
Triplicate for Consignor
Receipt Voucher
A registered person, on receipt of advance payment with respect to any supply of goods or services or both, shall issue a receipt voucher or any other document, evidencing receipt of such payment.
However in terms of Rule 50 of CGST Rule, where at the time of receipt of advance,-
(i) the rate of tax is not determinable, the tax to be paid at the rate of 18%.; (ii) the nature of supply is not determinable, the same shall be treated as inter-State supply
It is important to note that there is no liability to pay GST at the time of receipt of advance in case of supply of goods.
Refund Voucher
Where no supply is made and no tax invoice is issued against any advance received by the registered person, then said person may issue to the person who had made the payment, a refund voucher against such payment containing particulars, as required under Rule 51 of the CGST Rules, 2017
Input Service Distributor
An Input Service Distributor (ISD) should issue a tax invoice being an ‘ISD invoice’ for distributing credits to the GST registrations that have the same PAN as that of the ISD.
Invoice issued by the ISD shall have the following information:
- Name, address and GSTIN of the ISD
- Serial number and date of issue
- Name, address and GSTIN of the supplier of service, along with serial no. & date of invoice issued by such supplier, the credit in respect of which is being distributed
- Name, address and GSTIN of the recipient of credit
- Amount of credit distributed
- Signature or digital signature of the supplier(ISD) or his authorized signatory
This is a document required under Section 20 of the CGST Act, 2017.
Reverse Charge
Where the tax liability is cast on the recipient under section 9(3) & 9(4) In case of registered person, invoice is required to be issued by the supplier.
In case of unregistered person, invoice is required to be issued by the recipient itself on the date of receipt of goods or services or both.
Further a payment voucher would be issued at the time of making payment to the supplier or unregistered person.
Author: CA Praveen Bisht
