Is receipt equal to an invoice under GST Regime?

With so many reforms, updates and transparency happening globally, how many of you really feel the tax that pay you in form of GST (previously VAT/Service Tax) is going to the government. On August 15th 2018, India will be celebrating 72^nd Independence Day. But have we really got our freedom. Are we enjoying our rights? Are we doing our duties? Are you capable enough to ask your supplier an invoice, when he/she gives you a cash receipt/receipt voucher? If your answer to all these questions were no, then it’s time to wake up and fight for your freedom. Yet another interesting document which you receive instead of invoice is a document titled “estimate”. I am sure many would agree to these experiences.

It is after years of effort, GST was finally implemented in India w.e.f 01st July 2017. GST is a value-added tax levied at all points in the supply chain, with credit allowed for any tax paid on input acquired for providing the supply. It would apply to both goods and services in a comprehensive manner, with exemptions restricted to a minimum.

Even with all such amendments being introduced, how is the common man effected? You still go to the same shop, you pay the amount that shop keeper scribbles in a waste paper, take that and return home. With this being the same scenario throughout, let us make a change by being responsible to the society.

Invoice VS Receipt

During a sale of goods or services, a buyer and a seller enter into an agreement to transact business .The arrangement for business can be verbal or written, and the terms of the transaction will be recorded or documented with an invoice and a receipt. Invoices and receipts are source documents for accounting. An invoice is also called a bill. Invoices and receipts are used in accounting to record sales transactions and to account for requests and receipts for payment. Under normal conditions, invoice is issued before payment, and receipt is issued after payment. An invoice should work as a document that serves the purpose of transfer of ownership, but now-a-days people have accepted and comfortable with the receipt which is often considered as proof of ownership. Basically, receipt could serve as proof of payment only.

Invoices

An invoice is a document, or a request for payment, for a sale/supply of service which is ultimately intended in transfer of ownership. A normal invoice given by a supplier  that lists the goods/services provided by him to the customer, along with details of price charged, discounts given, taxes levied and settlement of advances if any along with date of transaction. Invoices should not be confused with purchase orders, which are written requests from buyers to sellers authorizing the shipment or delivery of goods with agreement to pay. They are used to request payment from buyers, keep track of sales/services given, control inventory and facilitate timely delivery of goods and services. Invoices are also used to track expected future revenues which are repetitive in nature and to manage personal relationships with clients by offering favorable payment options, such as extended time periods for payment or discounts for early payment or cash payment. An invoice is an acknowledgement issued by the vendor to the purchaser of goods or services to request for the payment of goods sold or services rendered by him. It is a non-negotiable legal document which identifies the buyer and seller.

Receipt

A receipt is a documentation that payment has been made to confirm a sale/supply service. The receipt serves the purpose of proof of ownership in most of the cases. Receipts may also include information about buyers and sellers. A receipt is normally issued only when payment is successfully made. It is the buyer’s proof of payment. They are used by buyers or customers to prove they paid for an item, especially in return situations in which goods are faulty or defective. A receipt is a commercial legal instrument used for stating that some goods or services of value have been received.

What does the Law say on Invoice/Receipt Voucher?

Government have specifically issued CGST Rules, notifications and concerned laws while issuing an invoice. Few of the general core areas are mentioned below.

A) TAX INVOICE UNDER GST– APPLICABLE FOR REGISTERED PERSONS.

A tax invoice referred to in CGST Act* shall be issued by the registered person containing the following particulars:-

a. name, address and GSTIN of the supplier;

b. a consecutive serial number, 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 GSTIN or UIN, if registered, of the recipient;

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

f. HSN code of goods or Accounting Code of services;

g. description of goods or services;

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

i. total value of supply of goods or services or both;

j. taxable value of supply of goods or services or both taking into account discount or abatement, if any;

k. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);

l. amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);

m. place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce;

n. address of delivery where the same is different from the place of supply;

o. whether the tax is payable on reverse charge basis; and

p. signature or digital signature of the supplier or his authorized representative:

(*provisions and exemptions applicable subject to conditions is not discussed in this article)

B) TIME LIMIT FOR ISSUING INVOICE.

The invoice referred to in rule 1, in case of taxable supply of goods/services, shall be issued within a period of thirty days from the date of supply of service. In case of supply of goods, the supplier shall issue a tax invoice showing the description, quantity and value of goods etc before or at time of removal of goods to recipient.

However, the act/law specifies that where the supplier of services is an insurer or a banking company or a financial institution, including a non-banking financial company, the period within which the invoice or any document in lieu thereof is to be issued shall be forty five days from the date of supply of service:

C) MANNER OF ISSUING INVOICE

D) BILL OF SUPPLY – APPLICABLE FOR UNREGISTERED DEALERS/PERSONS DEALING WITH EXEMPT GOODS.

A bill of supply referred to in CGST Act shall be issued by the supplier containing the following details:-

1. name, address and GSTIN of the supplier;

2. a consecutive serial number, 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;

3. date of its issue;

4. name, address and GSTIN or UIN, if registered, of the recipient;

5. HSN Code of goods or Accounting Code for services;

6. description of goods or services or both;

7. value of supply of goods or services or both taking into account discount or abatement, if any; and

8. signature or digital signature of the supplier or his authorized representative:

E) Invoice cum Bill of Supply

An invoice cum bill of supply is the document given by a registered person who is supplying taxable as well as exempted goods/services or both to an unregistered person. The document shall specify “Invoice cum Bill of Supply” in the heading. However, this regulation is not applicable when the supply is to a registered person. In such a situation, the registered person has to issue a tax invoice for taxable items and Bill of Supply for exempt items separately.

f) RECEIPT VOUCHER

A registered person shall provide a receipt voucher when advance is received. A receipt voucher referred to in clause (d) of sub-section (3) of section 31 shall contain the following particulars:

1. name, address and GSTIN of the supplier;

2. a consecutive serial number containing alphabets or numerals or special characters -hyphen or dash and slash symbolized as “-” and “/”respectively, and any combination thereof, unique for a financial year

3. date of its issue;

4. name, address and GSTIN or UIN, if registered, of the recipient;

5. description of goods or services;

6. amount of advance taken;

7. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);

8. amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);

9. place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce;

10. whether the tax is payable on reverse charge basis; and

11. signature or digital signature of the supplier or his authorized representative.

(*Supplementary Tax Invoice and credit/debit notes, Tax Invoice in special cases, Transportation of goods without issue of invoice is not considered in this article.)

Can a Receipt substitute an Invoice?

The above descriptions makes it clear that a receipt is not considered equal to an invoice. Even though both are commercial documents which forms part of a purchase cycle that contains details of buyer and seller, the documents stand distinct for the purpose they are served. So next time when someone gives you a receipt instead of an invoice, make sure you ask them an invoice. A person may be exempted to provide invoice only when value of goods or service or both supplied is less than two hundred rupees, subject to certain exemptions. Getting an Invoice for service availed/purchase of good is your right.  Let us all start enjoying our freedom and rights by doing our duties.