GST Provisions related to Invoices

Tax Invoice – (for taxable supply other than exempt)
The provisions related to Invoice to be issued by supplier of goods or services under GST are given in Section 31 of The CGST Act 2017. According to it, Tax Invoice is to be issued at the given time:

  • In case of Supply of Taxable Goods by registered person: on/ before
    • Removal of Goods, or
    • Delivery of goods
  • In case of Supply of Taxable Services by registered person: before/ after provision of service but within 30 days of date of supply (45 days in certain cases like supply by banking company, Financial Institutions, NBFC).

The Invoice for Supply of Goods needs to be in Triplicate (for Recipient, Transporter and Supplier) while the Invoice for Supply for Services needs to be in Duplicate (for Recipient and Supplier)
Further the provisos to the Rule deals with certain other conditions for issue of tax invoice:

  1. HSN Code: As per the Rule the Commissioner may be notification specify following:
    1. No. of digits of HSN for goods/ SAC for different class of registered persons for specified time
    2. Class of registered persons who shall not be required to mention HSN/ SAC for specified period
  2. In case of Export: An endorsement need to be specified on the Invoice as:
  • Also specify the country of destination

Bill of Supply – (for exempt supply and composition levy)
As per Section 31(3)(c) a registered person:

  • supplying exempted goods or services or both or (Exempt includes Nil rated, Exempt under section 11 and non- taxable)
  • paying tax under the provisions of section 10 (Composition levy)

shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed. Below is the sample Bill of Supply as per Rule 4 of the Tax Invoice, Credit and Debit Notes Rules. The Provisos to Rule 1 related to HSN Code and Export of Goods/ Services also apply to Bill of Supply.
The Rule further provides that for non- taxable supplies any other similar document issued under any other Act  shall be deemed as Bill of Supply.
Receipt Voucher – (for advance received)
As per Section 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.
Although taxable event under GST is Supply of Goods or Services, the liability to pay taxes shall arise at the Time of Supply.
One of the events for determining Time of Supply is “Receipt of Advance” from the customer. That means a tax liability will arise even before issue of Invoice or making supply to customer and as such taxes will be payable on advance receipts of payment.
Further as per the rule if the rate of tax is not determinable, the tax shall be paid @18%. If the nature of supply is not determinable at the time of receipt of advance (whether inter- state or intra state), then the supply shall be treated as inter- State Supply.
Refund Voucher – (for refund of advance)
As per Section 31(3)(e), 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. Rule 6 of the “Tax Invoice, Credit and Debit Note Rules” prescribes required particulars of the Refund Voucher.
Payment Voucher – (for payment of tax under reverse charge)
Tax Invoice by Recipient if supplier is unregistered:- As per Section 31(3)(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 (i.e. under reverse charge) shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both. Such Invoice has been already discussed above under Tax Invoice – (for taxable supply other than exempt) An additional requirement as per the said Rule 1 is that the tax invoice shall bear signature/ digital signature of – recipient/ or his authorized representative (and not of the supplier).
Payment voucher by Recipient- The Act also prescribes a voucher for the payment under reverse charge, which is to issued at the time of payment. It is to be noted that the time of supply in case of reverse charge is earlier of date of payment or 60 days from issue of invoice. Thus, Payment is voucher is the evidencing invoice to be reported in GSTR-2 (especially when the recipient do not issue invoice).
Credit Note- (by supplier for reduction of output tax liability)
As per section 34 (1) Credit Note is to be issued by the supplier in following cases:

  1. Where a tax invoice has been issued and the taxable value or tax charged in that tax invoice is found to exceed the tax value or tax payable in respect of such supply, or
  2. where the goods supplied are returned by the recipient, or
  3. Goods or services or both supplied are found to be deficient.

Such credit note shall be eligible to reduce the output tax liability of the supplier subject to following conditions (Section 31(2)):

  • Time limit: not later than September following the end of the f. y. in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier.
  • Amendment by recipient: As per the provision to the Section no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

Debit Note- (by supplier for increase of output tax liability)
As per section 34 (3) Debit Note is to be issued by the supplier in following cases where a tax invoice has been issued and the taxable value or tax charged in that tax invoice is found to be less than  the tax value or tax payable in respect of such supply. Time Limit is same as in case of Credit Note. No other condition is specifies for Debit Note.
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