An invoice is a document issued by a supplier to the buyer. It includes costs and quantities of the goods or services. GST invoice is the same, but under GST, the seller must match the invoice with that of the buyer’s invoice, or the seller might not be GST compliant. With GST, many indirect taxes subsumed into a single-tax. It also created more transparency compared to the previous tax system. One of the many rules to create transparency to the tax system is the correct invoicing.
A seller’s invoice should match with that of the consumer for the product sold. There are different formats and ways to prepare a GST compliance invoice. Suppliers who are familiar with invoicing can create a GST invoice format in excel, and, for suppliers with little to no experience, they can take the help of software available online. There are different aspects to becoming GST compliant, and correct invoicing is one of the essential parts of it.
1. Invoice rules
There is no specific format for an invoice, but there are necessary points you should mention to make your invoice GST compliant. Your invoice is issued to charge the tax and pass on the input tax credit. In case if the recipient is not registered, and the total value of the goods or services is more than Rs.50,000, then the invoice should mention the name and address of recipient along with the address of delivery with the state name and state code. In any other case, you should make sure you have these necessary fields in your invoice.
- The invoice number and date should be accurate.
- There should be a customer named on the invoice.
- There should be complete information about shipping and billing addresses.
- If the customer and taxpayer are registered, then the invoice should contain the GSTIN of both.
- You should mention the rate and amount of CGST, SCST, and IGST.
- The invoice should include taxable values and discounts.
- SAC Code (Service Accounting Code) and HSC Code (Harmonized System of Nomenclature Codes).
- Complete details of the goods or services like Total value, Quantity, Description, etc.
- Whether GST is payable on a reverse charge basis.
- Supplier’s signature.
2. Invoice time limit
There is a time limit rule for issuing an invoice, and it depends on different factors. The time limit for goods is different than the time limit for services.
- An invoice should be issued before or at the time of supply of goods if the goods supplied are taxable and if it involves the movement of goods.
- An invoice should be issued at the time of delivery to the consumer if the supply of goods is taxable, and it does not include the movement of goods.
- Invoice must be issued after or before the supply of service for taxable services within a maximum period of 30 days from the procurement of services. If there is a continuous supply of services, then the invoice must be issued on or before the due date, where the due date of payment can be determined from the contract.
- In the case of continuous supply of products and consecutive payments are involved then the invoice should be issued before or at the time of receipt of payment is issued.
3. Three invoices rule
Triple invoice should be issued if there is a supply of goods. The original or the first copy is for the consumer, the second copy is for the transporter, and the third copy is for the supplier. In the case of services supplied, a duplicate tax invoice should be issued. The original copy is for the consumer, and the second copy is for the supplier of services.
In cases of goods held on approval for sale or products that are held on a return basis, the goods are removed before an actual supply happens. In such cases, the invoice should be issued at a date that is at the time of actual supply. Or before the supply or six months from the date of removal of goods. The supplier, in such cases, must issue a revised tax invoice against the goods supplied earlier.
4. Other types of invoices
If a registered supplier is supplying to an unregistered individual, goods, or services which are taxable as well as those that are exempted, then the supplier can issue an “invoice-cum-bill” for all such goods and services. The other types of invoices are:
- Bill of supply: It is a bill that does not contain any tax amount as the supplier cannot charge GST to the consumer. Basically, a bill of supply is issued when the tax cannot be charged. For example, a registered supplier who is selling goods and services that are exempted from GST. A registered supplier who has opted for a composition scheme.
- Aggregate invoice: If the consumer is unregistered and the value of multiple bills is less than Rs.200 then the supplier can issue a bulk or an aggregate invoice on a daily basis for multiple invoices.
- Credit note: A credit note is issued by the supplier when the value of the invoice decreases. For example, in case, If the invoice has greater taxable value or tax value than the actual amount that should have been charged. If the buyer returns the goods to the supplier and if the services are faulty.
- Debit note: A debit note is issued by the supplier when the amount payable by the consumer to the supplier increase. For example, in case, if the invoice has a lower tax value or taxable value than the amount that should have been charged.
Creating and issuing an invoice is crucial for any business, and all the rules should be considered carefully to stay GST compliant. GST invoice format in excel is a very efficient format to create invoices, but for other formats or types of invoices, you can check on GST online website or take the help of invoice software that would almost automate the process of creating GST compliant invoices.