Law related to GST Tax Invoice

DEFINITION –

A seller issues an invoice to a buyer. It lists both the traders and the buyers, describes and quantifies the items, the date of shipment, mode of transport, prices, discounts, delivery terms, and delivery terms.

MEANING OF “INVOICE” UNDER GST

An “invoice” (or “tax invoice”) is a tax invoice under the GST regime. This refers to section 31 of 2017’s CGST Act. This section requires the issuance of an invoice or a bill for all supplies. Not only the person providing goods or services must issue an invoice. GST law requires that registered persons buying goods or services from unregistered persons must issue both a payment voucher and a tax invoice.

IMPORTANCE OF “TAX INVOICE” UNDER THE GST

A tax invoice is essential under GST. The tax invoice is an important document that not only documents the supply of goods and services but also allows the recipient to apply for Input Tax Credit (ITC).

CONTENTS OF INVOICE:-

Although there is no standard format for invoices, Invoice Rules make it mandatory that invoices include the following fields.

(a) Name, address, and GSTIN for the supplier

(b) A series of consecutive serial numbers, one or more, that contain alphabets, numerals, or special characters and any combination thereof, unique to a financial year.

(c) Date of issue

(d) Name, address, and GSTIN/UIN of the recipient, if applicable;

(e) Name, address, and delivery address, together with name and code of State, if the recipient is not registered and the value of taxable supplies is more than fifty thousand rupees.

(f) HSN code of good or Accounting Code of services

(g) Descriptions of goods and services

(h) Quantity of goods and units or Unique Quantity Code;

(i) Total supply value of goods and services, or both

(j) Taxable supply value of goods or services, or both, taking into consideration discount or abatement if applicable;

(k) Tax rate;

(l) Tax amount charged on taxable goods and services

(m) The name of the State and the place of supply, in the case of inter-State commerce or trade.

(n) Delivery address if the address of delivery is not the same as the supply location;

(o) If the tax is due on a reverse charge basis.

(p) Digital signature or signature of the supplier/authorized representative

REVISED INVOICE:-

Within one month of the date of issuance, a registered person can issue a revised bill against any invoice issued within the period starting with the effective date and ending on the date of issuance.

RECEIPT/ REFUND VOUCHER ON RECEIPT OF ADVANCE PAYMENT

A registered person must issue a receipt coupon or other document if he receives an advance payment for supply of goods, services, or both. This will prove receipt of the payment. If a receipt voucher is issued but no supply is made or a tax invoice issued, the registered individual who received the advance payment may issue a refund voucher.

It is also stated in the Invoice Rules, that at the time of receipt of advance payment

(i) The tax rate is not determinable. However, the tax could be paid @18%.

(iii) If the Nature of Supply is not determinable then it shall be considered inter-State supply.

INVOICE & PAYMENT VOUCHER BY PERSON LIABLE FOR TAX UNDER REVERSE CHARGE.

Reverse charge tax is a tax that a registered person must pay. Invoices for goods, services or both must be issued by the registered person. A registered person liable to reverse charge tax must also issue an invoice for such supplies.

INVOICE FOR CONTINUOUS SUPPLY OF GOODS

If continuous supply of goods involves successive statements of accounts and successive payments, the invoice must be issued either before or after each statement or as soon as each payment is received.

INVOICE FOR CONTINUOUS SUPPLY OF SERVICES

If there is a continuous supply of services, then where?

(a) The due dates of payment are ascertained from the contract. The invoice shall be sent on or before that due date.

(b) The due date for payment cannot be ascertained from the contract. The invoice shall be issued either before or after the supplier of services receives payment.

(c) Payments are linked to an event. The invoice must be issued before or on the day of the event.

ISSUE INVOICE IN CASE WHERE SUPPLY OF SERVICE CEASES UNDER A CONTRACT BEFORE THE COMPLETION OF SUPPLY

If the supply of services ends under a contract prior to completion, the invoice will be issued at that time and shall reflect the amount of supply made before it cessation.

SALE ON THE APPROVAL BASIS

If the goods being shipped or taken on approval to sell or return are removed prior to supply, the invoice must be issued either before supply, or six months after removal, whichever comes first.

TAX INVOICE FOR SPECIAL CASES

The following information must be included on an ISD invoice issued by an Input Service Distributor or an ISD credit card issued by him.

(a) Name, address, and GSTIN for the Input Service Distributor

(b) A sequential serial number that contains alphabets, numerals or special characters. Unique for a financial calendar year.

(c) Date of issue

(d) Name, address, and GSTIN for the recipient to whom credit is being distributed.

(e) Credit amount distributed

(f) Digital signature or signature of the Input Service Distributor, or his authorized representative.

E-INVOICE UNDER THE GST

GST e-invoice refers to the creation of a digital invoice for goods or services by a business company generated at the government GST portal. GST e-invoice has been considered for the reduction of GST evasion.

It is often misunderstood that an e-invoice is the creation of an invoice via the GST portal. The same can be used to submit/upload an ERP/ accounting software-generated invoice to Invoice Registration Portal for electronic authentication.

The GST officers reached a consensus and provided a system to enable businesses to generate an e-invoice for every sale made on the government GST portal. The system will not be available to businesses whose turnover exceeds the limit. The government will establish a threshold limit.

APPLICABILITY AND NON-APPLICABILITY OF E-INVOICE UNDER GST

As per GST N/N 05/2021-central tax, DT. 08.03.2021

Entities having turnover above Rs. 50 Cr. are required to generate E-Invoice from 01.04.2021

However, e-invoice doesn’t apply to the following category of persons irrespective of their turnover-

1. Special Economic Zone units

2. An insurer

3. An NBFC

4. A Goods Transport Agency

5. A banking company

6. A financial institution

7. A person supplying passenger transportation services

8. A person supplying services of admission to the exhibition of the cinematographic films in multiplex services

QR CODE TO GET B2C INVOICES

A QR Code is a short response code. It encodes information about an electronic invoice. It’s a two-dimensional barcode that can be scanned using any mobile device. The taxpayer must generate the B2C QR code. IRN generation is not necessary for B2C invoices. IRP will reject any B2C invoice sent. If the IRN generation is requested for a taxpayer, it can be blocked. The main purpose of creating QR codes for B2C electronic invoices is to encourage digitalization of payments via any UPI.

Dynamic QR code– This dynamic QR code can be edited and offers additional features like scan analytics, password protection and device-based redirection. Access management is also possible. This QR code is easier to scan because it has a smaller QR code image.

NON-APPLICABILITY OF QR CODE FOR B2C INVOICES

Exempted suppliers are: an insurance company, a bank company or financial institution; a non-banking finance company; a goods transport agent; passenger tickets by Transport Company; multiplex screen movie tickets and non-residents who make Online Information Database Access and Retrieval.

Exporting goods or services to non-registered individuals is possible without dynamic QR code. These are B2B transactions, and e Invoicing shall apply.

HOW TO GENERATE THE QR CODE FOR B2C INVOICES

QR codes for B2B invoices are generated by the IRP, not the taxpayer. B2C invoices allow taxpayers to generate QR codes using their own QR code-generating machines and algorithms.

Contents for QR code

These details must be included in a regular B2B QR Code:

• GSTIN for the supplier
• Supplier UPI ID
• Number of the invoice, as given by the supplier
• Date of generation of invoice
• Details of the bank account and IFSC of the payee
• CGST and SGST, IGST and Cess

Digital payment should be possible by scanning the QR code.