Invoice is the most important document in administration of GST. It is generally issued by the supplier notifying the purchaser of the obligation to make payment in respect of any transaction. It contains information as mentioned under Rule 1 of GST Invoice Rules. A tax invoice is essential evidence to:
i.support a registered person’s claim for the ITC of GST (input tax) incurred;
ii.trigger the time of supply as the invoice date will determine when GST is to be accounted for by a registered person on the supply of goods and services (accounting on invoice basis);
Section 2(59) defines invoice as a meaning assign to under section 28. In common parlance, Invoice indicates the amount receivable by the person issuing the invoice from the person to whom the invoice is issued.
The GST required to be paid throughout the distribution chain of ‘Supply’, on the value addition made at each stage is taxed thus avoiding double taxation. The GST will be paid in full, by utilizing the credit amount of GST already paid by the input supplier and in cash pertaining to the value addition.
The GST system designed to be a self-regulatory system based on strong Information Technology backing. This proposed system will be monitor by way of Invoice Reporting at every stage in the form of Returns GSTR-1, GSTR-2, GSTR-3 etc or rectified in form of returns GSTR-1A, GSTR-2A, GSTR-3A. Therefore, Tax invoices is the most important document under GST Scheme as they would issue by the supplier notifying the purchaser of obligation to make payment in respect of any transaction.
1.For determination of address of delivery
2.For determination of continuous journey of goods or services
3.For input services distributor’s mechanism;
4.For determination of time of supply of goods and services;
5.Application of GST in case of change in rate of tax;
6.For determination of Value of goods or services;
7.For taking input tax credit;
8.Assessment and other proceedings.
A tax invoice is similar to a commercial invoice or receipt, however a tax invoice issued in the compliance with GST contains additional details or information as may specified under the GST law. Every registered person who makes taxable supply of goods and services is required to issue a tax invoice in compliance with GST Laws.
For a registered person, tax invoice is necessary to claim input tax credit. Without a proper tax invoice, a registered person and his customers/clients cannot claim ITC incurred on their purchases of taxable goods or services.
The detail provisions pertaining to Invoice are provided in Chapter VII of Model GST Laws and Draft Goods and Services Tax -Invoice Rules.
In general Invoicing doesn’t seem like a big component of a business, but entire seamless credit under GST framework works around this documents. Taxpayers and department have always different opinion on the contents of an invoice, common mistakes can cost business and revenue significantly. Therefore a clear and unambiguous law and rules are required to govern issuance and other matter relating to invoice.
The Model GST Law and draft Goods and Services Tax-Invoice Rules are place in public domain which deal with statutory framework to regulate the invoicing matter.
The matters addressed under these provisions are followings:
2.1 Who will issue tax invoice?
2.2 Time period of issuance of invoices?
2.3 What are the contents and format of invoices?
2.4 What are the manners of issuance of invoice?
2.5 Exemptions to issue invoice, fully or partial.
2.6 Consequences for issue of invoice for the purpose of tax evasion.
Tax invoice are generally issued by supplier to recipient, however a registered taxable person who is liable to pay tax under reverse charge mechanism shall issue an invoice in respect of goods or services received by it on the date of receipt of goods or services from a person who is not liable to be registered under the Act.
The term Supplier is defined under Section 2(94) of Model GST Law as below:
“Supplier” in relation to any goods and/or services shall mean the person supplying the said goods and/or services and shall include an agent acting as such on behalf of such supplier in relation to the goods and/or services supplied.
The term recipient is defined under Section 2(81) “recipient” of supply of goods and/or services means-
(a) where a consideration is payable for the supply of goods and/or services, the person who is liable to pay that consideration,
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available, and
(c) where no consideration is payable for the supply of a service, the person to
whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply.
Explanation.- The expression “recipient” shall also include an agent acting as such on behalf of the recipient in relation to the goods and/or services supplied.
a.Where the supply involves movement of goods: Invoice shall be issued before or at the time of removal of goods for supply to the recipient.
b.Where the supply does not involve movement of goods: Invoice shall be issued before or at the time of delivery of goods or making available thereof to the recipient.
“Removal’’, in relation to goods, means –
(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier, or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient.
c.Where supply of goods on continuous basis: In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or as the case may be, each such payment is received.
Section 2 (30) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis;
d.Where the supply of goods on approval basis: Where the goods are removed on the basis of approval, a ‘bill of supply’ issued at the time of removal and Invoice shall be issued after Six month from the date of removal or date of intimation of approval received whichever is earlier.
The time of issuance of invoice shall, before or after the provision of service but a within a period prescribed in this behalf.
a.Where supply of services on continuous basis:
(i) Where the due date of payment is ascertainable from the contract: the invoice shall be issued before or after the payment is liable to be made by the recipient but within a period prescribed in this behalf whether or not any payment has been received by the supplier of the service.
(ii) Where the due date of payment is not ascertainable from the contract: the invoice shall be issued before or after each such time when the supplier of service receives the payment but within a period prescribed in this behalf.
Invoice shall be issued within the prescribed time, pertaining to supply of services;
Rule 1(2) of GST Invoice rules provides
The Invoice shall contain the descriptions, quantity and value of the and other prescribed particulars.
Rule 2 of GST Invoice rules provides
ORIGINAL FOR RECIPIENT;
DUPLICATE FOR TRANSPORTER; and
TRIPLICATE FOR SUPPLIER.
b.The serial number of invoices issued during a tax period shall be furnished electronically through the Common Portal in FORM GSTR-1.
c.A registered taxable person may obtain an Invoice Reference Number from the Common Portal by uploading, on the said Portal, a tax invoice issued by him in FORM GST INV-1, and produce the same for verification by the proper officer as required under section 61 in lieu of the tax invoice.
d.The Invoice Reference Number shall be valid for a period of 30 days from the date of uploading.
A registered taxable person supplying exempted goods and/or services or paying tax under the provisions of section 9 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed.
A registered taxable person supplying non-taxable goods and/or services or availing composition scheme shall be exempted from issuing invoice, however, they will require to issue a bill of supply in a prescribed format contains the particulars as prescribed under rule 3 of GST Invoice Rules.
If supplier supplies goods/services without issue of invoice or issues invoice without supply of goods or issues incorrect invoice or false invoice or issues invoice using GSTIN of another supplier, then penalty of Rs. 10,000 or the amount of tax evaded shall be payable. also, prosecution provisions are attracted in case of false invoicing as per section 92.
As per the provisions of Rule no. 2 of GST Invoice Rule, in supply of goods three copies of invoice are required to be issued. These copies are used in following manner.
(a) the original copy being marked as ORIGINAL FOR RECIPIENT;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
A transporter need not to carry the Duplicate invoice if GST IRN number is generated.
The transporter is not required to carry a duplicate copy if the supplier obtains a GST invoice reference number. This number can be obtained electronically from GSTIN. The manner of obtaining electronic invoice reference number is explained below. The Invoice Reference Number shall be valid for a period of 30 days from the date of uploading. The registered taxable person shall produce the IRN for verification to Proper office when required.
A registered taxable person may obtain an Invoice Reference Number from the GST Common Portal. to obtain the IRN he is required to uploaded, on the said Portal, a tax invoice issued by him in FORM GST INV-1.
Where a tax invoice is found to exceeds the taxable value and/or tax payable in respect of a supply, in such situation a credit note will required to be issued, in other hand Where a tax invoice is found to less the taxable value and/or tax payable in respect of a supply, in such situation a credit note will required to be issue.
a.name, address and GSTIN of the supplier;
b.nature of the document;
c.a consecutive serial number containing only alphabets and/or numerals, unique for a financial year;
d.date of issue of the document;
e.name, address and GSTIN/ Unique ID Number, if registered, of the recipient;
f.name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered;
g.serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;
h.taxable value of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient; and
i.signature or digital signature of the supplier or his authorized representative.
7.1 Invoice issued by Input Service Distributors (ISD): A tax invoice issued by an ISD shall contain the following details:-
(a) name, address and GSTIN of the Input Service Distributor;
(b) a consecutive serial number containing only alphabets and/or numerals, unique for a financial year;
(c) date of its issue;
(d) name, address and GSTIN of the supplier of services, the credit in respect of which is being distributed and the serial number and date of invoice issued by such supplier;
(e) name, address and GSTIN of the recipient to whom the credit is distributed;
(f) amount of the credit distributed; and
(g) signature or digital signature of the supplier or his authorized representative:
An ISD of a banking company or a financial institution including a NBFC is exempted from mentioning serial number, however, it shall contains all other information mentioned above.
7.2 A banking company or a financial institution including an NBFC, is exempted from mentioning serial number and the address of the recipient of taxable service, it has to mention all other information as prescribed in rule1 of GST Invoice Rules.
7.3 A Goods Transport Agency will require to mention the following information alongwith the information as provided in Rule 1 of GST Invoice Rules:
a.Gross weight of the consignment,
b.Name of the consignor and the consignee,
c.Registration number of goods carriage in which the goods are transported,
d.Details of goods transported,
e.Details of place of origin and destination,
f.GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency,
7.4 Passenger Transportation Service providers will issue a tax invoice which includes Ticket in addition to the information as required under Rule 1 of GST Invoice Rules.