How to Create a GST Invoice Online for Businesses in India

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When you sell a product or service to your customer, you have to necessarily issue an invoice for the same. For businesses in India, a lot of information needs to be gathered in this regard. Right from getting acquainted with the details required to be put in the invoice, the necessity of invoice tools, the impact of GST and GST invoicing formats, data appropriation, etc need to be taken care of.

With the entry of GST rules in the market, the way business is done has undergone a sea of changes and the country has been impacted by these new rules and regulations on a very large scale. In this article, we focus on the method of creating online invoices for businesses; particularly startups post the introduction of GST. 

Let’s first see how GST has brought about a change in this regard. With the introduction of GST, the whole process of taxation became transaction-oriented. That means, a transaction once carried out, needs to be reported immediately in the form of an invoice document. 

The greatest drawback before GST implementation was the multiple levels of tax implications, which have now been largely removed and all states and union territories are brought under one single umbrella of uniform taxation procedures. That said, it directly means all invoices must and should pertain to GST norms without fail. 

Invoicing for startups

Invoices play a very significant role for startups for the following two things:

  • To file tax returns for the company
  • To seek credit on purchases

Maintaining a consistent flow in transactions will also ease the supply chain management systems to cater to a single invoicing facility. While assessing tax returns for your startup, it is crucial to maintain a steady and consistent record of invoices in an organized fashion. 

By seeking relevance in filing tax returns from time to time, startups can push their capital by a working margin per annum and also gain a higher credit score. 

There are numerous types of GST invoices that suit different business needs, some of them are listed here:

  • Normal GST invoice 
  • Vouchers 
  • Debit notes 
  • Credit notes  
  • Supplementary invoices 
  • Supply bill

The existing norms in GST cater to only these kinds of invoicing forms. These forms have, to a large extent, replaced the tax invoices, VAT and excise invoices, commercial invoices, etc that existed earlier. 

The difference in these invoices and the present system is that, previously these invoices had different rules and regulations catering to specific types. There was no application of norms on a standard basis. Also, the jurisdiction where these invoices were prepared came to the fore to make up for a very significant element in the whole invoicing system. 

Issuing invoices 

Next come the big questions – When should invoices be raised, when should they be sent and within what time they need to be sent? It’s quite simple under GST. Everything is well defined and standardized to ease business operations plus record keeping activities. 

It’s important to know what a transaction means technically. In simple words, a transaction merely means an event that involves exchange of services involving relevant data and processing of useful information. 

Technically, we may add certain terms like exchange of goods and services, transfer, licensing, etc to the basic definition to bring in a business perspective. The definition is not complete without including the term ‘invoice’ in any transaction. 

Any transaction should compulsorily generate an ‘invoice’. When exactly an invoice is to be generated is discussed here in this section. We discus transaction involving goods and services separately. When it comes to goods, when there is physical movement of goods from one place to another, once the goods are taken for moving it is mandatory to raise an invoice. When there is transfer of goods but not involving physical movement, then invoices need to be created well within the delivery at the destination. 

When you send goods to the same client in frequent time intervals, care is to be taken to provide invoice before each such movement of goods to the destination. Regarding services, invoice or invoices need to be generated within 30 days from the initiation of any service. Rules and regulations are relaxed when it comes to banks and other institutions providing financial services in the public domain. They need to raise invoices in a time period of 30 to 45 days once a service has been initiated. 

Creating invoices

Now that we are familiar when invoices are to be raised and sent, we come to the section where we try to familiarize ourselves with the steps to create an invoice in the online mode. 

When it comes to transactions involving goods, the supplier issues the original invoice to the recipient of the goods. A duplicate copy of the invoice would be lodged with the person responsible for transporting the goods from the supply point to the destination. A third copy of the invoice remains with the supplier sending the goods. 

When it comes to services, the supplier holds the duplicate copy of the invoice and sends the original to the recipient who receives the services on the other end. 

Businesses and startups are advised to follow the norms laid down by the government in order to create efficient invoices. Also, the invoice number is the most crucial element in the invoice and helps to relate to the transaction between the supplier and the recipient. 

Some of the vital information required to create an invoice are:

  • Supplier details like name, address and GSTIN. The same details of the recipient are also required
  • Type of invoice to be created
  • Invoice date and invoice number
  • For goods- HSN code, for services – Accounting code
  • Description of the dispatch item (it could be details of goods or services).
  • Net value of goods and services plus specifying quantity is mandatory
  • Individual tax rates plus tax differentiation under CGST, IGST and SGST.
  • Full details of supply and delivery locations
  • Reverse charge if applicable
  • Discounts if any
  • Handwritten or digital signature

This is the most basic form of an invoice and alterations are inclusive of other important details. For example, an export invoice needs additional details since the goods or services are going out of the country. All these details when fed into a GST billing software create the most authentic and appropriate invoice as per norms provided by government provisions. 

There are also exceptions when invoices are issued in other formats. GST includes variations based on the business orientation and likewise we have the composition scheme. In such a case, the original tax invoice is duly replaced by the ‘Bill of Supply’. 

When the goods and services are already delivered but the supplier seeks a revision in the rates from what he quoted earlier, there comes the necessity of credit and debit notes. Credit note if the supplier seeks a reduction from the earlier quoted price and debit note if the supplier seeks an increment of rates than what was quoted earlier. 

Invoices form an integral and most important part of any business transaction. Hence, the right kind of invoice within the stipulated time limit is to be attached while uploading returns to get tax benefits.

Also read: GST Rules for Startups in India