Under GST, invoices must be issued for every taxable supply of goods or services. Invoice acts as official proof of a transaction between the supplier and the recipient. It help businesses comply with GST laws and regulations, ensuring accurate tax reporting and payment.
The recipient must have a valid invoice to substantiate their input tax credit claim under GST.
Various invoices like tax invoice, bill of supply, and revised invoice, categorize transactions based on their nature, helping to determine the applicable GST rates and compliance requirements.
Different invoice types clarify the nature of the transaction, such as supply of goods, services, or exempt transactions, facilitating better record-keeping. For instance, Invoices like debit/credit notes cater to specific situations, such as returns or adjustments, ensuring all transactions are appropriately documented.
Understanding the appropriate type of invoice issued for each transaction is crucial for business as it will help to maintain accurate records and comply with tax regulations.
The term invoice is a broader term in GST. Under GST law, invoice includes followings;
Tax Invoice
Tax invoice in GST (goods and services tax) is a document issued by a registered supplier to a buyer indicating details of the sale of goods or services.
For both supplier and receiver, a tax invoice acts as documentary evidence that a GST sale has taken place.
Tax invoice gives all the necessary details to the receiver to avail input tax credit (ITC). In most of the supply transactions you will find a tax invoice is issued. In certain special cases different types of invoice are issued. Let us discuss these special cases and the type of invoices issued.
Debit note and credit note
Both debit and credit notes are issued in case of some amendment to supply transactions or to adjust the value of an original invoice.
A debit note is issued when the value of the original invoice is increased. This type of situation arises due to price rise of goods or services or in order to correct an error in the original invoice. As the value of invoice increases, the GST liability and taxable value also increases.
When the value of goods or services decreases after issuing the original invoice, a credit note is issued. This type of situation arises due to decrease in price, discount, correction of errors or return of goods.
By issuing a credit note, the taxable value and GST liability decreases.
Both debit and credit notes should have details like the original invoice number, date, and reasons for the adjustment.
In the GST portal, both debit and credit notes must be recorded to update the value and GST details of the original invoice.
Receipt voucher
Receipt voucher is issued when a payment is received before the supply of goods or services. Receipt voucher is issued as a confirmation of receipt of payment.
All the essential details such as voucher number, date of issue, name and GSTIN of the supplier, description of goods or services, name and GSTIN of the recipient and amount paid should be mentioned in the receipt voucher.
Payment voucher
Payment voucher is issued when a registered person makes a payment to suppliers whose supplies are covered under reverse charge mechanism.
As per GST law a payment voucher should have all the essential elements such as supplier details (name, address and GSTIN (if registered)), serial number, date of issue, description of goods or services, amount paid to the supplier, rate and amount of GST charged.
Bill of supply
Bill of supply is issued in case of exempted goods or services, or when the supply is by a composition dealer who is not allowed to collect GST from customers.
All the essential elements such as supplier details (Name, address, and GSTIN), recipient details (name, address and GSTIN), invoice number, issue date, description of goods or services, total value and declaration.
The declaration should state that the supply is exempt from GST or covered under the composition scheme.
The recipient of the Bill of Supply cannot claim Input Tax Credit (ITC) on the purchases, as no GST is charged.
Delivery challan
Delivery challan is issued when a transaction is otherwise than by supply. This means, a delivery challan is a document issued by the supplier when goods are transported without an invoice.
A delivery challan is issued often for the purpose of delivery to a customer or for job work. Delivery challan must have details as per GST law which includes, unique serial number, issue date, supplier details (name, address and GSTIN), description of goods, mode of transport and vehicle number.
Delivery challan is also issued for transferring goods between different locations of the same business.
Revised invoice
Revised invoice is issued when a previously issued tax invoice needs correction or changes in details like the amount, tax rate, or description of goods or services.
A revised invoice should have the original invoice number, unique identifier of the revised invoice, issue date, supplier details (name, address and GSTIN), recipient details (name, address and GSTIN) and description of goods or services.
A revised invoice helps the recipient to adjust their ITC based on the correct details.
Refund voucher
Refund voucher is issued by a supplier to acknowledge the refund of an amount to a customer. Refunds can be due to returned goods or cancellation of services.
Within the GST framework, a refund voucher is an essential document that facilitates the process of returning payment to customers.
In addition to all essential details, a refund voucher should have serial number, issue date, supplier details (name, address and GSTIN), receiver details (name, address and GSTIN), receipt invoice number, description of goods or services, amount refunded and reason for refund.
A refund voucher helps the recipient to adjust their input tax credit if applicable.
Self Invoice
Self Invoice is issued by the recipient of goods or services under reverse charge mechanism when a registered person receives supplies which are covered under RCM.
Invoice number, issue date, supplier details (name, address and GSTIN), receiver details (name, address and GSTIN), description of goods or services, value of supply, GST rates and amount of GST should be part of self invoice in addition to other details as required by GST law.
All these invoices are vital documents in the GST ecosystem to ensure compliance. Failure to issue an invoice can lead to penalties and compliance issues.
Under GST law, there is no prescribed format for the above invoices. Suppliers and recipients must ensure that all the details as per GST law are mentioned in the invoice.
