GST Invoicing and all you need to know about it!

GST (Goods and Service Tax) is more than a year old now and right from its inception we have seen lot of changes and amendments in the law. Now, most of the taxpayers are familiar with GST Laws, processes and procedures in GST and are moving smoothly as it becomes older and more streamlined. But still there are certain factors which one needs to take care of when dealing with GST. Business loan interest rates keep changing and it is important for business owners to keep a check on the same from time to time.  

One of the important issues common in GST is the problem of incorrect invoices or invoice format. Many of the taxpayers perform numerous errors in GST invoices due to lack of understanding about the law relating to GST invoicing and GST Rules. As invoice is important to avail GST credit, incorrect invoice might obstruct the same. Thus, it is of paramount importance to get correct GST invoice as a purchaser and issue GST invoice as a Seller or supplier. If in case the taxpayer does not issue such an invoice to his GST registered customer, his customer loses the ITC claim, it adds up to the cost of customer and the taxpayer eventually loses his or her customers.

We take you to some of the important aspects of GST invoicing to through more light on the topic.

When should you issue a GST Invoice?

Certain people have confusion regarding timing of issuing GST invoice. Whether invoice should be issued first and then goods are to be supplied or goods are to be delivered first and then invoice should be issued? This confusion can be resolved when we take a close look at GST laws.

1] In case of supply of Goods:

As per sec 31 of CGST Act 2017, a registered person supplying taxable goods shall, before or at the time of —

1. Removal of goods for supply to the recipient, where the supply involves movement of goods; or

2. Delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed.

3. Issue of account statement/payment, where there is continuous supply

2] In case of supply of Services:

As per sec 31 of CGST Act 2017, a registered person supplying taxable services 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 may be prescribed:

Thus tax invoice must be issued within –

• 30 days from the date of supply of the service
• 45 days from the date of supply of the service, where the supplier is an insurer or banking company or a financial institution

Minimum amount for raising a GST Invoice:

As per Sec 31(3) (b) a registered person may not issue a tax invoice, if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed.

Though it is always a good practise to issue GST invoice for any amount, as per GST Act read with rules, a tax invoice need not be issued when the value of the goods or services supplied is less than INR 200, if – 

• The recipient is unregistered and
• The recipient does not require an invoice, in case if the recipient demands for the invoice, should be issued

Minimum Number of GST Invoice copies to be issued:

GST law requires taxpayers to issue specified number of tax invoice copies. Let’s have a look at number of invoices we have to issue 

• In case of supply of goods, the supplier shall issue 3 copies of the invoice
  • Original
  • Duplicate, and
  • Triplicate
• Whereas, in the case of supply of service, he shall issue only 2 copies of the invoice
  • Original
  • Duplicate

Below table will explain in a better way, the number of invoices to be issued.

Essential Particulars that should be Present in GST Invoice:

There’s also confusion regarding what is the actual format of GST invoice among taxpayer. We have seen certain taxpayers have issued GST invoices which do not comply with GST Act read with GST rules. Such type of invoices may be termed as invalid as they do not meet the criteria as per GST law and rules. Irrespective of the fact, you are buyer or seller, service provider or recipient of service. Thus taxpayers must ensure that whatever may be their Invoice format, but invoice should have below mentioned particulars.

As per CGST Rules, 2017, Subject to rule 54, a Tax Invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,- 

(a) Name, Address and Goods and Services Tax Identification Number of the supplier; 

(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year; 

(c) Date of its issue; 

(d) Name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient; 

(e) Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is fifty thousand rupees or more; 

(f) Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice; 

(g) Harmonised System of Nomenclature code for goods or Services Accounting Codes for services; (HSN/SAC codes)

(h) Description of goods or services; 

(i) Quantity in case of goods and unit or Unique Quantity Code thereof; 

(j) Total value of supply of goods or services or both; 

(k) Taxable value of the supply of goods or services or both taking into account discount or abatement, if any; 

(l) Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); 

(m) Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); 

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

(o) Address of delivery where the same is different from the place of supply; 

(p) Whether the tax is payable on reverse charge basis; and 

(q) Signature or digital signature of the supplier or his authorised representative: 

Clarification on several points:

(g) Harmonised System of Nomenclature code (HSN/SAC codes) for goods or services;

HSN/SAC codes shall be mentioned in Tax Invoice as well as furnished in Table 12 of FORM GSTR-1. The taxpayers who have turnover below the limit of Rs 1.5 Crore will have to mention the description of goods/service in place of code.

Whereas, the description is optional for taxpayers who are required to furnish HSN/ SAC codes on the basis of aggregate turnover as below:

• Less than Rs.1.5 crores – HSN/SAC code is not mandatory (Hence, composition dealers may not be required to specify HSN at 2-digit level also)
• Rs.1.5 crores to Rs. 5 crores – HSN code at minimum 2 digit chapter level is mandatory. SAC code is mandatory
• Above Rs. 5 crores – HSN code at minimum 4 digit chapter level is mandatory. SAC code is mandatory.
• For export turnover, 8-digit HSN code is mandatory irrespective of any of the above 3 categories.

(i) Quantity in case of goods and unit or Unique Quantity Code thereof; 

Here Unique Quantity Code refer to unit of measurement in simple terms. For example Kgs, Dozens, units, bundles etc. 

Important Note: As per Circular No. 90/09/2019-GST dated 18th February, 2019:

A Registered person supplying taxable goods or services or both should issue tax invoice which shall correspond to requirements enumerated in Sec 31 of CGST Act, 2017 and Rule 46 of CGST Rules, 2018.

A number of Registered Persons (especially Banking, Insurance and Telecom Sectors, etc) do not mention Place of Supply and Name of State for Inter-State Supply in tax invoices.

Thus as per circular, all registered persons making supply of goods or services or both in the course of inter-State trade or commerce need to specify the place of supply along with the name of the State in the tax invoice.

3] Invoices for Export of Goods and Services:

As per GST Rules, in the case of the export of goods or services, the invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX”

 or 

“SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details, namely,- 

(i) Name and address of the recipient; 

(ii) Address of delivery; and 

(iii) Name of the country of destination

No Export invoices without Shipping Bills: Shipping Bill is also important document which should be accompanied with Export Invoices. As per GST Law, exporter is eligible to get refund of accumulated Input Tax Credit (ITC) pertaining to the tax period. As of now refund filing is done manually, though website allows us to submit documents electronically, but still most of refund applications are done manually. GST authorities give utmost importance to shipping bills for processing refund applications. Thus one must take care to see that export invoices are always accompanied with respective shipping bill for refund application.

4] Bill of Supply

As per Sec 31(3)(c) of CGST Act 2017, a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed: 

Thus, as per combined reading of GST Act with GST rules, Bill of Supply is to be issued by a registered supplier in the following cases:

• Supply of exempted goods or services
• Supplier is paying tax under composition scheme

Similar to tax invoice, a bill of supply need not be issued when the value of goods or services supplied is less than INR 200, unless the receiver insists for the bill. However, a consolidated bill of supply should be prepared at the end of the business day for all such supplies for which the bill of supply is not issued.

5] Invoice-cum-Bill of Supply

Where a registered person is supplying taxable as well as exempted goods or services or both to an unregistered person, a single “invoice-cum-bill of supply” may be issued for all such supplies.

6] Consequences of GST invoice not having Particulars as specified in rule above

As per Rule 36(2) of CGST rules, Input tax credit shall be availed by a registered person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said document.

[Provided that if the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by such registered person.]

Thus in case all required particulars are not present in GST invoice, then ITC (Input Tax Credit) availed on such invoice need to be reversed. 

7] What Document to issue for Advance payments?- Receipt Voucher

As per sec 31(3)(d), a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment;

Thus once a Seller or supplier receives advance, then he shall issue receipt voucher.

When no supply is made and no Invoice is issued after receipt of Advance

where, on receipt of advance payment with respect to any supply of goods or services or both, the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment;

8] Transportation of Goods without Issue of invoice – Delivery Challan

For the purposes of- 

(a) Supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known, 

(b) Transportation of goods for job work, 

(c) Transportation of goods for reasons other than by way of supply, or 

(d) Such other supplies as may be notified by the Board, the consigner may issue a delivery challan, without issuing tax invoice

9] Importance of GST Invoice and GSTR-2A for Refund of Input Tax Credit (ITC)

What is GSTR-2A?

Whenever the taxpayer purchases goods from a particular vendor, then for Taxpayer it will be purchase, but for vendor it is sales, vendor will file GSTR-1 (GST Return for Sales) citing details of Taxpayers such as GSTN, Taxable Amount, GST amount etc. Whenever a vendor files his GSTR-1, the same entry gets auto-populated in GSTR-2A of Taxpayer. Therefore in simple words GSTR-2A is record of all purchases made by taxpayers, where vendors have cited GSTN of taxpayer. Thus it is more reliable to GST authorities as purchase and sale is cross checked.

As per Circular No. 59/33/2018-GST dated 4th September 2018, the refund claim shall be accompanied by a print-out of FORM GSTR-2A of the claimant for the relevant period for which the refund is claimed. The proper officer shall rely upon FORM GSTR-2A as an evidence of the supply by the corresponding supplier in relation to which the input tax credit has been availed by the claimant. 

It may be noted that there may be situations in which FORM GSTR-2A may not contain the details of all the invoices relating to the input tax credit availed, possibly because the supplier’s FORM GSTR-1 was delayed or not filed. In such situations, the proper officer may call for the hard copies of such invoices if he deems it necessary for the examination of the claim for refund. 

It is also emphasized that the proper officer shall not insist on the submission of an invoice (either original or duplicate) the details of which are present in FORM GSTR-2A of the relevant period submitted by the claimant. 

Thus we can conclude following from the above circular:

1. ITC refund can be claimed if entries are present in GSTR-2A

2. If no entry in GSTR-2A, then Invoice should be submitted to GST authorities processing refunds.

Thus it is of paramount importance to have GST Invoice from vendors with correct particulars as per law.

GST might not be a new law in India now, but still there are certain confusions and complexities faced by various taxpayers. One of such complexities is dealing with incorrect invoice from vendors. If particulars as per law are not present in the invoice, then ITC taken on such invoice should be reversed as per law. Thus it is important to ensure that invoices issued as well as invoices received by taxpayers are verified while entering the same in their books. Therefore each and every taxpayer should take care to see that correct GST invoice is issued to customer, also taxpayer should ensure that he receives correct invoices from his vendors and in case of any discrepancies, highlight the same to respective vendor.