The invoice becomes the basic evidence/documents for recording the transaction in books of accounts. Generally speaking, an invoice is a commercial instrument issued by a seller to a buyer. It identifies both the trading parties, and lists, describes, and quantifies the items sold, shows the date of shipment and mode of transport, prices and discounts, if any, and the delivery and payment terms.
Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017.This section brings importance to issue an invoice or bill of supply to every individual dealing in supply of goods and services. The GST law mandates that any registered person buying goods or services from an unregistered person needs to issue a payment voucher as well as a tax invoice.
The type of invoice depends upon the category of registered person who makes supply.
Importance of tax invoice under GST.
When should a tax invoice can be issued?
The time for issue of invoice depends on the nature of supply. A registered person supply goods should encompass all the details regarding the good in the invoice issued as prescribed in the Invoice Rules.
Government may or by recommendation notify the categories of goods or supplies in respect of which a tax invoice shall be issued.
If the supplier is dealing with the taxable service shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as prescribed in the Invoice Rules.
The Government may, on the recommendations of the Council, specify the categories of services in respect of any other document regarding the supply of taxable service shall be deemed to be the tax invoice or otherwise may not be issued.
Bill of Supply
Tax invoice is generally issued to charge the tax and pass on the credit. In GST there are some instances where the supplier is not allowed to charge any tax and hence a Tax invoice can’t be issued instead another document called Bill of Supply is issued.
Revised Invoice.
Every registered person who has been granted registration with effect from a date earlier than the date of issuance of certificate of registration to him, may issue revised invoice in respect of taxable supplies effected during the period starting from the effective date of registration till the date of issuance of certificate of registration.
He may issue a consolidated revised invoice in respect of all taxable supplies made to a recipient who is not registered (does not have GSTIN).
Sale on approval basis.
Where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.
Credit and Debit Notes.
When a tax invoice is issued on supply and later it is found that the tax charged in that invoice is more than the chargeable amount or recipient has returned the goods then the supplier can issue a credit note to the recipient.
In cases where tax invoice has been issued for a supply and subsequently it is found that the value or tax charged in that invoice is less than what is actually payable/chargeable the supplier can issue a debit note to the recipient.
Tax invoice in Special Cases.
An invoice issued by an ISD or a credit note issued by an ISD shall contain details slightly different from the normal invoice formats.
Where the ISD is a banking company or a financial institution or an NBFC, tax invoice includes any document issued in place of tax invoice by whatever name called, whether or not serially numbered. But the document should contain information as specified above.
Transportation of goods without an invoice is permissible for the consignor to issue a delivery challan in lieu of invoice at the time of removal of goods.
Read the Full Text of the Concept Note Below
