If you have a Sales tax registered business in India then you have to provide GST invoices to your customers for the sale of services or goods.
Starting October 1, 2020, the country will move from voluntary to mandatory e-invoicing- the rollout is phased.
There is no specific format for an invoice, however, the invoice must have the following mandatory fields.
Each invoice includes:
1) Name of the supplier
2) Address of the supplier
3) GSTIN of the supplier
4) Tax invoice number ( each invoice must have a unique serial number for that financial year)
5) Date of issue
6) If the buyer is registered with the sales tax then the name, address, and GSTIN of the buyer must be mentioned.
7) if the buyer is not registered with the sales tax and the value of the invoice is more than INR. 50,000/- then the sales tax invoice should carry the following details:
- Name of the buyer
- Address of the buyer
- Delivery address
- State name and state code
8) HSN code of goods / SAC code of services
- If the turnover is less than 1.5 crores HSN code is not required.
- If the turnover is greater than 1.5 crores but less than 5 crores than 2 digit HSN code is required.
- If the turnover is greater than 5 crores than 4 digit HSN code is required.
9) Quantity of the goods/unit of the goods (meter, liter, kilogram, etc)
10) Description of goods or services
11) The net value of goods or services
12) The taxable value of goods or services
13) GST rate applied by CGST, SGST and IGST
14) Signature of the supplier or his/her authorized representative
Time for Issuing an invoice
The time to issue the invoice is as follows:
- In the case of goods, an invoice is issued at the time of the supply of goods or before or after the delivery.
- In case of services, an invoice is issued within 30 days of the supply.
Type of invoices
Bill of Supply
A bill of supply is a tax-free invoice. A GST registered person can issue such an invoice if he/she is selling services or goods that are exempted from GST. In such cases, the seller has no right to charge GST to the purchaser.
Invoice-cum-bill of supply
This type of invoice can be issued if a GST registered person is selling both exempt and taxable goods or services.
If the seller is not registered with GST and the net amount of various invoices is less than INR 200, then the seller can issue such an invoice.
Manner of Issuing Invoice
The Indian sales tax Law demands businesses to keep copies of all of their invoices and all these details should be retained for six years.
Invoices for Supply of Goods
For the supply of goods, three copies of invoices need to be issued:
- Original Copy for the recipient
- Duplicate Copy for the Transporter
- Triplicate Copy for the supplier
Invoices for Supply of Services
For the supply of services, two copies of invoices need to be issued:
- Original Copy for the recipient
- Duplicate Copy for the supplier
E-invoicing in India
E-invoicing in India becomes mandatory on October 1, 2020. Up until then, registered businesses have had to voluntarily choose to submit their invoices electronically. With the changes expected, businesses have no option but to adjust to the requirements of electronic invoicing.
India’s Goods and Services Tax Council (GSTC) elected against switching to the Peppol-model of e-invoicing that is used as the international standard. Taxpayers are instead asked to create e-invoices using individual accounting systems.
Requirements of e-invoicing in India
The e-invoicing system comes with new requirements and processes, which means that companies need to familiarize themselves with e-invoice solutions moving forward.
- The e-invoice must be in JSON format.
- The document must be submitted to the Invoice Registration Portal (IRP) for validation.
- Each invoice must have a unique Invoice Reference Number (IRN).
NOTE: invoices that do not have an IRN number will be invalid.
Businesses can add an e-signature to the invoice, although this is not a mandatory requirement.
Validation of e-invoices
Taxpayers submit their invoices electronically to the IRP system. The e-document is subjected to an automated check for validation. Here is what the e-document must have to be assigned the unique IRN:
- Mandatory fields duly filled with the correct data
- The supplier’s Goods and Services Tax Identification Number (GSTIN) must be valid
- The buyer’s GSTIN must be valid
- A valid invoice number
- The correct financial year
Additionally, the invoice should not be a duplicate of what is available in the GST system.
Once validated, the invoice is digitally signed with the IRP system allocating each unique invoice a number. The taxpayer gets the IRN and the customer an approved invoice.
The portal also generates a QR code and sends it to the taxpayer and their customer. The QR code captures details of the invoice and parties can use it to authenticate the e-invoice.
Both the supplier and the buyer can then access the e-invoice from the GST portal.
Where the invoice is deemed invalid, the system generates an error message that is sent to the supplier detailing the areas or reasons for such a response.
It takes about 24 hours for the IRP system to relay the e-signed invoice to the GST Network. The same e-document is uploaded to the e-waybill system for access by relevant parties.