As a major tax reform in India, the Goods and Services Tax (GST) unifies a variety of indirect taxes – service tax, custom duty, central excise duty, state-level value added tax (VAT) and surcharges. But GST is a consumption based tax which is levied on transaction value. The enterprises have to pay tax on the value of individual transactions. This includes an array of sales expenses including packaging and commission. Also, they have to focus extensively on invoicing as an integral part of purchase and sales transactions. Currently, there are a lot of doubts and confusions about GST invoicing. So lets try to understand the various changes and aspects of invoicing under GST.
Understanding Important Aspects of GST Invoicing
Types of Invoices
The GST Act allows enterprises to choose from various types of invoices according to nature of individual transactions. According to nature of a transaction, a business may issue a tax invoice, debit note, credit note, bill of supply, supplementary tax invoice, advance receipt, or refund voucher. For instance, an enterprise has to issue a tax invoice while supplying any taxable good or service. Likewise, it needs to issue a supplementary tax invoice if any deficiencies are found in the tax invoice issued by it. Hence, each enterprise needs to decide the type of invoice to be issued according to individual transactions.
The GST Act does not require enterprises to issue invoices in any specific or prescribed format. Hence, each enterprise can design and issue custom GST invoices according to its transactions. But the GST Act makes it mandatory for businesses to include a number of fields in the GST invoices – alphanumeric invoice number; name, address, and GSTIN of the issuer; date of issue; name, address, and GSTIN or UN of the recipient; delivery address; HSN Code of goods or Service Accounting Code for services; description of goods/services; quantity of goods; value of goods/services; GST rate, amount of GST; and supplier’s signature or digital signature.
Number of Copies
Each enterprise needs to generate three copies of each GST invoice while supplying goods. The original copy of the invoice must be marked as “Original for recipient” and issued to the recipient of goods. The duplicate copy of the invoice needs to be marked as “Duplicate for transporter and issued to the transporter. The triplicate copy of the invoice must be marked as “Triplicate for supplier” and retained by the supplier. However, the taxpayer can use an option associated with his GSTIN to generate an invoice reference number which can be used by the transporter without requiring a paper invoice during transportation.
Time Limit for Issuing GST Invoices
Each enterprise has to issue GST invoice within specific days from the date of supplying the good or services. It needs to issue the GST invoice while supplying the goods. In case of normal supply, the enterprise needs to issues the invoice on the date of removal or delivery. But it has to issue GST invoice while issuing the account statement of payment in case on continuous supply. On the other hand, a business has to issue the GST invoice within 30 days from supplying of services. The time limit for issuing GST invoice for services is extended to 45 days for banks and non-banking financial companies (NBFCs).
Exemptions and Exceptions
The GST Act includes several provisions to simplify the GST invoicing process. It allows suppliers to not mention HSN code of goods supplied by them in the invoice if their annual turnover is less than Rs. 1.5 crore. Likewise, the enterprises in banking, insurance and passenger transport sectors are exempted from mentioning the serial number and customer’s address in the GST invoices due to large number of transactions. Normally, enterprises need to issue GST invoices while supplying goods. But the GST Act allows enterprises to issue GST invoices after supplying the goods in certain circumstances.
For instance, a supplier can issue the GST invoice after delivery if the quantity of goods to be supplied is know at the time of removal and delivery. Likewise, an enterprise is not required to issue separate Bill of supply if it has already issued VAT invoice for non-taxable goods supplied by it. Also, the small businesses are exempted from issuing GST invoices to non-registered customer for transactions amounting to less than Rs 200. However, they are still required to issue a consolidated invoice for all transactions carried out during a particular day.
In addition to issuing the right GST invoice for each transaction, thee enterprises also need to submit details of details for taxable goods or services according to the issued invoice in the GST return. While filing GST Returns, they have to mention details of good and supplies for which GST invoices are issued. However, the enterprises simply have to mention the total amount of tax-free goods or services issued without mentioning the GST invoices.