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Invoice under general parlance vs. tax parlance:

Invoice in simple terms is nothing but a document specifying list of goods sent or services provided and a statement of the sum due against those items. Invoice is often understood as 'proof of sale' but this common understanding is far from the truth.

Invoice is a document recording the terms of an arrangement already entered into either orally or on a paper. An invoice does not bring into existence a sale agreement but merely records the terms of whatever arrangement that may have been entered into by the parties, involving the subject matter.

Most of the Indirect tax laws require the preparation of an invoice which does not mean that the absence of an invoice defeats the levy but prescribes an unambiguous occasion when the tax may become recoverable with a proper record of the terms of the underlying arrangement. Therefore, an invoice can evidence not only a sale but every other form of supply such as transfer, barter, exchange, license, rental, lease or disposal. If issuance of an invoice is uncommon for barter or a rental arrangement, then it is to do with our own unfamiliarity and nothing to do with its impermissibility.

Invoice under GST:

GST requires that a tax invoice or bill of supply to be issued before or on the occurrence of certain event or within a prescribed time. Therefore, an invoice is required for every other form of supply such as transfer, barter, exchange, license, rental, lease or disposal.

GST allows seamless flow of Input Tax Credits (ITC) across the supply chain. One of the fundamental pillars of GST is checking the Input Tax Credit (ITC) Claims, for which data of all Invoices to be uploaded and matched. GST system is backed up by strong IT support from Goods and Services Tax Network (GSTN) for matching such data. GSTN seeks all registered dealers shall file Invoice wise details in order to do such matching.

Tax Invoice:

Every registered taxable person under GST supplying Goods or services is required to issue a tax invoice for all supplies effected. The word "Every registered Taxable person" clearly specifies that issuing Tax Invoice is compulsory under GST law. However, government may notify some other document for certain category of services. E.g. Bus ticket, Bank Voucher etc.,

Bill of Supply:

A supplier supplying exempted goods or service or a supplier who has opted for composition levy scheme has to issue a bill of supply instead of a tax invoice. A bill of supply is not eligible for claiming input tax credits.

Tax Invoice Vs. Bill of Supply

I will hereby highlight few differences between a bill of supply and Tax Invoice before diving deep.


Tax Invoice

Bill of Supply

Who has to issue?

Taxable Supplier who is supplying Taxable goods or Taxable Services

Supplier of Exempt Goods or services and Composition Tax payer

Exceptional Cases

Receiver needs to issue invoice if he is paying tax on reverse charge on receiving goods or services from an unregistered supplier.

Need not issue a bill of supply if the value of the goods or services supplied is less than ₹100/-.(Need to prepare one aggregate BOS for each day)

Can Input Tax claimed?

Input Tax Credit(ITC) can be claimed based on Tax Invoice

Input Tax Credit(ITC) cannot be claimed based on 'Bill of Supply'


When Tax Invoice shall be issued?

A) Every Registered Taxable person who Supplies Taxable Goods shall issue a tax Invoice:

Before/at the time of:

  1. Removal of Goods, if supply involves movement of goods
  2. Delivery of Goods/making available to recipient, if supply doesn't involves movement of goods
  3. Issuance of successive statements accounts, if supply is a continuous supply of goods
  4. When recipient approves or 6 months from the date of removal, if supplied is on approval basis.                              

B) Every Registered Taxable person who Supplies Taxable Services shall issue a tax Invoice:

  1. *within 30 days  from date of supply, in normal cases
  2. within 30 days from the due date of payment, in case of continuous supply of services where due date ascertainable
  3. within 30 days from the date of payment, in case of continuous supply of services where due date is not ascertainable
  4. at the time of cessation, in case of Continuous supply of services where contract ceases  

*If supplier is a bank or any financial institution, then within 45 days from the supply of service.

 Manner of issuing Tax Invoice:

In case of supply of Goods, Tax Invoice shall be prepared  In TRIPLICATE

  • Original for recipient 
  • Duplicate for Transporter
  • Triplicate for supplier

In case of supply of Services, Tax Invoice shall be prepared  In DUPLICATE

  • Original for recipient
  • Duplicate for supplier

Prescribed Particulars of a Tax Invoice:

A tax invoice issued by the supplier shall contain the following details:-


a.

Type of Invoice (Tax Invoice, Revised Invoice or Supplementary Invoice)

b.

Name, address and GSTIN of the supplier

c.

A consecutive serial number containing only alphabets and/or numerals, unique for a financial year

d.

Date of  issue of Invoice

e.

Name, address and GSTIN/ Unique ID Number, if registered, of the recipient

f.

Name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered and where the taxable value of supply is fifty thousand rupees or more.

g.

HSN code of goods or Accounting Code of services.

h.

Description of goods or services.

i.

Quantity in case of goods and unit or Unique Quantity Code thereof.

j.

Total value of goods or services.

 .

Taxable value of goods or services taking into account discount or abatement, if any.

l.

Rate of tax (CGST, SGST or IGST)

m.

Amount of tax charged in respect of taxable goods or services (CGST, SGST or IGST)

n.

Place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce

o.

Place of delivery where the same is different from the place of supply.

p.

Whether the tax is payable on reverse charge.

q.

Signature or digital signature of the supplier or his authorized representative


A. When tax invoice is issued by an  exporter then invoice should have the additional information:


  1.  

An endorsement "supply meant for export on payment of IGST" or "supply meant for export under bond without payment of IGST", as the case may be.

  1.  

Name of the country of destination; and

  1.  

Number and date of application for removal of goods for export [ARE-1].


B. When tax invoice is issued by an Input Service Distributor (ISD) then invoice should have the information


  1.  

Name, address and GSTIN of the ISD

  1.  

A consecutive serial no. containing only alphabets & numerals, unique for a financial year*

  1.  

Date of issue

  1.  

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

  1.  

Name, address and GSTIN of the recipient of credit

  1.  

Amount of credit distributed

  1.  

Signature or digital signature of the supplier(ISD) or his authorized signatory


C. When tax invoice is issued by a Banking company / NBFC / financial institution Information then following information is not essential


  1.  

Invoice serial no.

  1.  

Address of the recipient


D. When tax invoice is issued by a Goods transport agency then invoice should have the following additional information


  1.  

Gross weight of the consignment

  1.  

Name of the consignor & the consignee

  1.  

Registered no. of goods carriage, used for transportation

  1.  

Details of goods transported vi. Details of place of origin & destination

  1.  

GSTIN of person liable for paying tax.


When tax invoice is issued by a supplier of passenger transport service address of the recipient is not essential.

What's new under GST?

Under GST along with Tax Invoice the concept of Bill of supply is brought in. Bill of supply is issued by a composition tax payer and a registered taxable person in case of supply of Exempt goods or supplies.

The provision to issue revised invoice (from the effective date of registration to the date of issuance of certificate) is not available at present. This document would be useful for claiming tax credit for supply of goods/services during this period.

At present, invoices or bills of sale etc. can be issued inclusive of tax in certain cases whereas it is mandatory to indicate the tax charged in the GST regime.

Self-invoice to be prepared on the date of receipt of supply, which is liable to tax under reverse charge, from an unregistered person. Such Invoice sequence numbers to be reported along with GSTR-1 as per published draft formats.

Rectification of an error in an Invoice:

• Revised Invoice will be issued for correcting clerical errors or typographical errors.

• Credit Note will be issued in case of increase in taxable value and increase in tax rate

• Debit Note will be issued in case of decrease in taxable value and decrease in tax rate


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Category GST, Other Articles by - CA Chaitanya Kumar R 



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