GST invoice is an essential part of GST Law as it acts as primary evidence of the supply of goods or services. There are specific rules under GST that must be adhered to while preparing an invoice. There are various types of GST invoices depending on the type of GST taxpayer.
How to Create a GST Invoice
GST invoice contains all the details of the supply of goods or services and applicable GST taxes and discounts. Creation of GST invoices can be manual or through computer software.
Numerous accounting software is available which have an in-built invoice-generation facility. Once you enter the sales/ outward supply and all relevant details, an invoice is automatically generated, printed, and issued to the buyer.
Following are the basic steps to create a GST invoice. No matter what kind of software anyone uses, these steps are more or less the same.
Step 1: Select the option ‘Invoice’ (built-in every accounting/GST software)
Choose the relevant branch (out of multiple branches) that will issue the GST invoice. If there is no branch, this option will not appear.
Step 2: Feed-in Date of Invoice:
Type in the Invoice Date. One can also set the date of payment if outward supply is made on a credit basis. If payment is received on the same date, then the invoice date and the payment date will be the same.
Step 3: Choose the debtor/customer from the list:
The list of customers/debtors is to be fed in before you create an invoice. The drop-down tab will show all these debtors. Select the relevant customer. If you haven’t fed in customer data, one can easily use the option, ‘Create Debtor/Customer.’
Step 4: Choose the Place of Supply
Place of supply is an essential requirement to ascertain the GST tax type: ‘IGST or CGST & SGST.’ The place of supply will be self-selected according to the delivery/shipment address. If such address is not known, the place of supply will be deemed to be the State where such supplier is registered.
Step 5: Feed-in the details of goods or services
From the drop-down tab, simply select the goods or services which are to be supplied. If such a list is not previously typed-in, one can simply select ‘Create Item’ and type in the relevant details of goods/services.
CGST tax rate will auto-populate (based on the universal HSN/SAC codes generally in-built in software). Then select unit, quantity, any discount/incentives. IGST or CGST & SGST for the selected goods/services will be automatically shown.
Step 6: Click to Create GST Invoice: If all the above details are given, simply click the ‘Create GST Invoice’ option. Such invoice is downloadable (either in excel or pdf format) and can be printed.
One can also create an invoice using this online facility: Razorpay Invoices.
Important Note: The above steps are for the creation of ‘GST Tax Invoice’ meant for Regular Taxpayers. For Composition Taxpayers, ‘Bill of Supply’ is created for which the above steps are equally applicable. The only difference: GST Tax cannot be charged in a Bill of Supply. The Tax Invoice and Bill of Supply have been explained below.
Types of GST Invoices:
- Tax Invoice: Every person registered under Goods and Services Tax (GST) under ‘Regular Scheme’ is required to issue a GST invoice called ‘Tax Invoice’ whenever a supply of goods or services is made to the buyer or recipient.
The purpose of such a tax invoice is to collect tax and allow the buyer (to whom the invoice is issued) to claim the Input Tax Credit (ITC). A Tax invoice must have these details mentioned:
- Invoice number (serially numbered)
- Invoice date
- Name of Buyer/Recipient
- GSTIN of such buyer/recipient (registered or otherwise)
- Address (both shipping & billing)
- Place of supply
- Specific codes for goods and services (HSN/SAC codes)
- Details of goods/services, quantity, unit, taxable value, discounts, etc.
- Applicable GST tax rate, amount of such tax (SGST/UTGST, CGST, IGST)
The words ‘Tax Invoice’ must be written on the top of such an invoice. For invoice value less than Rs 200, such invoices can be consolidated (day-wise) and be issued.
- Bill of Supply: There are certain provisions under GST where the supplier of goods or services cannot charge/collect GST Tax. In such a case, a bill of supply has to be issued to the buyer/recipient. Bill of Supply will be issued in the following cases:
* The registered supplier is supplying goods or services that are exempted under GST.* The registered supplier opts for ‘Composition Scheme’ instead of ‘Regular Scheme’
Since GST tax is not collected from the buyer, such buyer will not claim Input Tax Credit.
The words ‘Bill of Supply’ must be written on the top of such a document. For a bill of supply valuing less than Rs 200, the supplier doesn’t need to issue such a bill.
- Invoice-cum-bill of supply: There may arise a situation when a registered supplier supplies both exempt and taxable goods or services in a single invoice. In such a case, the GST authority has issued notification no. 45/2017, dated 13.10.2017. As per this notification, such a supplier can issue a single invoice titled, ‘Invoice-cum-bill of supply.’
- Receipt Voucher: Sometimes, a registered supplier may get an advance from the buyer. In such a case, the supplier will issue a ‘receipt voucher.’
- Refund Voucher: After issuing the above receipt voucher, if the supplier doesn’t make any supply of goods and services for some reason, then the supplier issues a Refund Voucher.
- Payment voucher: If the supplier is not registered under GST and goods or services are supplied to the buyer/recipient who is registered under GST, and if such goods and services are subject to ‘reverse charge’ under GST, then the buyer/recipient has to issue a payment voucher to the unregistered supplier.
- Credit Note/ Debit Notes
A supplier issues a Credit Note to the buyer/recipient when goods are returned, a decrease in value/price of goods/services, or when discounts are made. Credit notes have to be shown in the GST returns for decreasing the GST Tax liability.
Time limit: credit notes can be issued at the earliest of two dates: the month of September after the end of the financial year or up to filing GST annual return.
A supplier issues a Debit Note to the buyer/recipient if such supplier has charged a price in the original invoice that is less than the correct value. Debit notes have to be shown in the GST returns, which will increase the GST Tax liability.
There is also a supplementary tax invoice. It is a document issued by a registered supplier when GST taxes are wrongly charged, either excess or short of the actual GST tax amount. Such supplementary tax invoices can be in the form of a debit note or a credit note.
Previously in the GST portal, a supplier had to show credit notes and debit notes separately for each original invoice. There had to be a clear linkage of credit/debit notes and original invoices.
Thus, there were numerous practical difficulties involved. However, as a relief, from 14.09.2020, GST law was amended to the effect that such credit/debit notes can be combined, and the original invoice number and date need not be mentioned.
Other Points to Be Considered
GST Invoices are issued in the following way:
For Goods: Original invoice to the Buyer, Duplicate invoice copy to transporter, Triplicate invoice copy to be kept by the supplier.
For Services: Original invoice copy to the Recipient, Duplicate invoice copy to be kept by the supplier.
e-Invoicing or Electronic Invoicing
This is a new concept under the GST law introduced for streamlining the supply process of goods or services. Here, B2B invoices have to go under electronic authentication by GSTN, and then such authenticated e-invoices are passed to the GST portal, which will be reflected in the GSTR-1 return.
Thus, this will stop manual data entry methods in GSTR-1, and the e-way bills will be automatically generated. Under this system, Invoice Registration Portal (IRP) issues a unique identification number for every e-invoice.
e-Invoicing applicability was made in three phases:
- For all GST registered persons whose aggregate/total turnover exceeds the Rs.500 crore threshold in any of the preceding financial years (2017-18, 2018-19, and 2019-20), e-invoicing was applicable from 01.10.2020.
- For all GST registered persons whose aggregate/total turnover exceeds the Rs.100 crore threshold in any of the preceding financial years (2017-18, 2018-19, and 2019-20), e-invoicing was applicable from 01.01.2021.
- For all GST registered persons whose aggregate/total turnover exceeds the Rs.50 crore threshold in any of the preceding financial years (2017-18, 2018-19, 2019-20, and 2020-21), e-invoicing was applicable from 01.04.2021.
GST invoices are primary source documents, and care should be taken that such invoices are prepared strictly under the GST provisions. An incorrect invoice may attract a penalty or fine, and Input Tax Credit so availed can also be disallowed.