GST Invoicing

The implementation of Goods and Services Tax (GST) is a significant tax reform in our country, generating extensive discussions. One crucial aspect of this tax system is the GST invoice bill, which we will briefly explain along with relevant guidelines.


    What is GST Invoice?

    For GST-registered businesses, the concept of a GST invoice is likely familiar. However, for customers, here’s a brief explanation.

    A GST invoice includes information about the parties involved in the transaction and provides a comprehensive list of goods and services sold, along with their prices. The invoice also indicates the applicable discounts and taxes for each item, along with additional details.

    Rules for GST Tax Invoice

    When adhering to the guidelines for invoice contents, issuers must follow specific rules that outline the necessary details and provide instructions on how to include them.

    Serial Number Rules

    Given below are the rules that the issuers are required to follow

    • The invoice numbers should follow a sequential or consecutive order.
    • The invoice numbers must be unique within a financial year and should consist of an alphanumeric combination.
    • The serial number should not exceed a maximum of 16 characters.
    • GST should be divided into CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), and IGST (Integrated Goods and Services Tax). It should not be charged as a single entity.
    • For transactions conducted outside the issuer’s state, a separate tax known as IGST (Integrated Goods and Services Tax) must be charged. Conversely, for sales within the same state, both SGST (State Goods and Services Tax) and CGST (Central Goods and Services Tax) should be charged.

    Invoice Signature Rules

    In accordance with CGST rules, the issuer’s signature is a mandatory field in a GST invoice. The following are the specifications for a valid signature:

    • The bill can be signed either manually or digitally, as long as it is affixed in accordance with the requirements outlined in the Information Technology Act, 2000.
    • The GST invoice bill should be signed by the supplier or their authorized representative.

    According to section 116 (2), the authorized representative of the supplier can be a company secretary, a practicing advocate, a chartered accountant, a retired officer of the Commercial Tax Department, or a regular employee who appears on behalf of the supplier.

    Invoice Payment Rules

    Under the CGST Act, there are specific provisions for scenarios where a GST-registered individual makes purchases from an unregistered seller. There are two possible cases to consider.

    • If a GST-registered individual makes a purchase from an unregistered seller, there are two scenarios to consider. In the first case, the registered individual is required to issue a tax invoice for the transaction.
    • In the second case, if the registered individual receives supplies that are exempt from GST, they are required to issue a “Bill of Supply” instead of a regular tax invoice.

    When is a GST Invoice Issued?

    The time limits for various types of supplies may vary. Here is a concise guide to help understand the different time limits applicable.

    For Goods

    • For normal supplies, the GST invoice bill should be issued on or before the removal of the purchased item. Removal, as defined under Section 2 (96) of the principal Act, refers to the direct collection of the item by the recipient or its dispatch by the supplier for delivery.
    • In the case of continuous supplies, the GST invoice must be issued on or before the receipt of payment or the generation of the account statement.

    For Services

    • In the general case, the issuance of the GST invoice must be done within 30 days of rendering the services.
    • For financial services provided by banks, NBFCs, and other financial institutions, the last date of issuing the GST invoice is the 45th day from the date of service supply.

    That was all about the important rules and regulations regarding tax invoices. Now, this is not the only type of invoice in practice. Want to know about the other prevalent types under GST? Keep reading.

    Other Types of GST Invoices

    Given below are the other types of invoices under GST

    Bill of Supply

    The primary distinction between a bill of supply and a tax invoice is that the former does not include any GST charges (i.e., 0% GST). As a result, a bill of supply can be issued in two specific cases.

    • One case where a bill of supply is issued is when a GST-registered supplier has opted for the composition scheme.
    • Another case where a bill of supply is issued is when a GST-registered supplier is dealing with exempted goods and services.

    Consequently, the recipient cannot claim an input tax credit based on the bill of supply.

    Furthermore, if a registered entity is involved in the supply of both exempt and taxable services or goods, they can issue a comprehensive invoice-cum-bill of supply in accordance with Notification No. 45/2017 of Central Tax.

    Aggregate Invoice

    If a seller issues multiple invoices to an unregistered buyer, each with a value less than Rs. 200, they can opt to issue a single invoice that consolidates the total amount. This type of invoice is commonly known as a bulk or aggregate invoice.

    Credit and Debit Note

    Such commercial documents are issued when there is a need to rectify any discrepancies found in a previously issued tax invoice for a product or service.A debit note is issued when any of these 2 conditions arise.

    • The previously issued tax invoice shows a lower taxable value than the actual correct amount. In such cases, a commercial document is issued to rectify this discrepancy and reflect the accurate taxable value.
    • The tax amount charged in the previously issued tax invoice is lower than the actual value. In such situations, a commercial document is issued to rectify the discrepancy and adjust the tax amount to reflect the accurate value.

    On the contrary, a credit note is issued for the opposite reasons. It is issued when there is a need to adjust or provide credit for an overcharged amount or for goods or services that were not delivered or utilized as initially invoiced.

    • On the other hand, a credit note is issued when the taxable amount or tax charged in the invoice is higher than the correct figures. It serves to adjust or provide credit for the excess amount charged or for the goods or services that were overinvoiced.
    • In cases where there is a discrepancy in the services or products provided, and the buyer returns them, requesting a refund, a credit note is issued. The credit note acknowledges the return of the goods or services and serves as a document for the refund process.

    In addition to the aforementioned types of invoices in GST, there are various other documents and vouchers that pertain to specific transactions, depending on various conditions. These additional documents and vouchers are designed to cater to specific requirements and circumstances within the GST framework.

    How to Generate E-Invoice in GST?

    The Goods and Services Tax (GST) has ushered in a digital era of tax compliance, streamlining processes and enhancing transparency. One significant development is the introduction of e-invoicing, an electronic way of documenting business transactions. In this informative guide, we demystify the process of generating e-invoices in GST, providing businesses with a comprehensive step-by-step approach to ensure seamless compliance.

    Understanding E-Invoicing in GST

    E-invoicing involves the creation and exchange of electronic invoices directly between the supplier’s and recipient’s systems. It aims to reduce errors, enhance data accuracy, and simplify the reporting of transactions.

    Step-by-Step Guide to Generate E-Invoice in GST

    Generating an e-invoice in GST involves a systematic process that ensures accurate documentation and adherence to regulations. Here’s a detailed step-by-step guide:

    • Choose an E-Invoice Service Provider (E-ISP): Select an authorised E-Invoice Service Provider (E-ISP) from the list provided by the GST Network (GSTN).
    • Prepare the Invoice: Create the invoice with all the required details, including supplier and recipient information, description of goods/services, HSN code, quantity, and value.
    • Upload the Invoice on E-ISP Portal: Log in to the chosen E-ISP portal and upload the invoice data. The portal will generate a unique Invoice Reference Number (IRN).
    • IRN Generation: The E-ISP portal communicates with the GSTN and generates the IRN, QR code, and digitally signs the invoice.
    • Approval and Acknowledgment: The IRN and digitally signed invoice are sent back to the E-ISP portal. The portal then shares the digitally signed e-invoice with the supplier.
    • Share E-Invoice with Recipient: Share the e-invoice, along with the QR code, with the recipient.
    • Update Return with IRN: Include the IRN and other e-invoice details in your GST return while filing GSTR-1.
    • Reconciliation: Reconcile the e-invoice data with your accounting records to ensure accuracy and compliance.

    Benefits of E-Invoicing

    E-invoicing offers several benefits to businesses, including:

    • Accuracy: Reduced manual data entry minimises errors, leading to accurate reporting.
    • Seamless Compliance: E-invoices are automatically reported to GSTN, simplifying compliance.
    • Efficiency: Streamlined processes save time and effort in invoice generation and reporting.

    Generating e-invoices in GST is a pivotal step toward embracing digital transformation and ensuring compliance with the modern tax regime. By following the step-by-step guide provided above and utilising authorised E-Invoice Service Providers, businesses can streamline their invoicing processes, enhance accuracy, and contribute to a more transparent and efficient GST ecosystem. As GST continues to evolve, mastering e-invoice generation remains essential for seamless financial operations and sustainable business growth.

    Who Should Issue E-Invoices in GST?

    Not all businesses are required to issue e-invoices in GST. The requirement to issue e-invoices applies to specific categories of taxpayers and transactions. Here are the key categories:

    • Turnover Threshold: The obligation to issue e-invoices is based on the aggregate turnover of a business. As of my knowledge cutoff in September 2021, businesses with an aggregate turnover exceeding Rs. 50 crore in any financial year are required to issue e-invoices.

    Business Categories: E-invoicing is mandatory for certain specified categories of businesses, including:

    • Registered persons supplying goods to a registered person (B2B transactions).
    • Exporters and importers: Businesses are required to comply with the Reverse Charge Mechanism (RCM).
    • Taxpayers providing supplies through an e-commerce operator.

    Exemptions: Certain categories of businesses are exempt from issuing e-invoices, including:

    • Special Economic Zone (SEZ) units
    • Insurance companies
    • Banking companies and financial institutions
    • Non-banking financial companies
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