Difference Between Retail Invoice and Tax Invoice

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Difference Between Retail Invoice and Tax Invoice
Difference between retail invoice and tax invoice

Invoices are an instrument to drive the business on a successful path. Invoices act as proof of the transaction that happened between customers and owners. There are two main types of invoices: Retail and tax invoice.

The article will share the two types of invoices and their differences. Let us see this in detail.

What is a Retail Invoice?

Retail invoices are used by businesses to record the sales of their goods and service to their end customers. The transaction will happen between the buyer and the registered seller. Once the transaction is completed, the seller creates an original and duplicate copy of an invoice. The seller hand over the original copy to the buyer, and he keeps the duplicate copy with him for evidence.

There is no necessity to include the GST number in the retail invoice. It is suitable for B2C transactions. Retail invoices are essential for the business to track the sale of the products, customer payments, etc… Retail invoices include the payment mode, are issued at the time of transactions, and act as a bill for customers.

The retail invoice contains the details listed below:

  • Invoice No
  • Invoice date when issued to the buyer
  • Buyer Details
  • Seller Details
  • How much quantity purchased
  • Price of a single stock
  • Final Amount
  • Add discount (if available)
  • Seller Signature

Advantages of Retail Invoice

  • Retail invoices record all the sales details for accounting purposes.
  • Retail invoices record all the customers details, what they purchased, on what date they send the payment, etc…
  • Retail invoices track the stocks available in the warehouse and ensure to fill the products are when needed.
  • Retail invoices track the customer details and their purchasing history. It helps to allow the business to customize the transactions and interactions with customers.
  • Retail invoices track product prices and discounts issued to customers. With the help of this record, business owners should take prompt decisions for future pricing.

Disadvantages of Retail Invoice

  • Retail invoice carries only a limited amount of information compared to the tax invoice. It doesn't contain any GST or VAT details.
  • Retail invoices do not have any legal requirement, and they will not accept as evidence of taxable purpose.
  • Even though we purchase with the help of GST. It is impossible to claim the tax credit without the help of tax invoices.
  • Retail invoices do not contain detailed information on how many goods and services are sold to the customers. It creates more confusion at the last moment.
  • Compared to tax invoices, retail invoices do not have a clear record of transactions. So, it is hard to maintain records in the company.

What is a Tax Invoice?

A tax invoice considers a legal document issued by a registered seller during the time of sale to another registered seller(buyer). The transaction happens between seller to seller.

Tax invoice is suitable only for B2B businesses. The registered seller creates one original copy and two duplicate copies. The original copy will hand over to the registered buyer, and the seller keep the remaining two duplicate copies.

Tax invoices play an essential role in the business. At the end of the academic year, the seller should submit the invoices to the tax authorities on time without any delay.

The tax invoice contains the following details:

  • Invoice No
  • Invoice date when they issue to the buyer
  • Seller's name and full address
  • Buyer's name and full address
  • Should have Tax Identification Number(TIN)
  • How much quantity issue to the buyer
  • Single stock price
  • Final Amount
  • Charges of tax
  • Authorized Signature

Advantages of Tax Invoice

  • Tax invoices are a requirement for every business registered under GST/VAT.
  • Another advantage of tax invoices is to claim the tax credit when the seller does purchases under GST.
  • Tax invoices maintain records of all sales transactions, which is helpful for auditing and tax purposes.
  • Tax invoices show detailed information about sales of goods or services, their total amount, and the GST amount. This helps to promote your business to the next step.
  • Tax invoice helps to build trust and confidence with the customers by giving proper purchase records.

Disadvantages of Tax Invoice

  • Understanding Tax invoices is a difficult concept. It is hard to recognize the invoices that do not belong to the background of law of taxes and regulations.
  • Preparation of tax invoices requires more time, and businesses should hire more staff to do this tedious job.
  • The cost of the tax invoices is high, and distributing expenses costs more. Businesses with large transactions are hard to manage tax invoices.
  • Businesses should maintain records of all tax invoices for a particular time. It is a burden for the business owners and occupies more space in the company.
  • Ensure the business follows all the tax laws, rules, and regulations, which takes more time, and should gain advice from experts.

Difference Between Retail & Tax Invoice

S.No

Retail Invoice

Tax Invoice

1

It is suitable for Business to Consumer (B2C) transactions

It is suitable for Business to Business (B2B)  transactions

2

It is not necessary to include details of GST Information

It is necessary to include details of the GST

3

The retail invoice does not have any format

Tax invoices follows a particular format mentioned in law

4

Retail invoice issued to the buyer for the due amount of purchase of goods or services from the seller.

Tax invoices issued for the purchaser should pay the amount of tax. It is served by the registered dealer.

5

In retail invoices, products are sold for resale purposes 

In tax invoices, products are sold to the end customers 

6

Retail invoice contains all taxes from the seller to the customer.

Tax invoice contains tax that should pay to the government 


7

Seller creates an original and duplicate copy of invoices. The original copy hand over to the buyer and the seller keeps the duplicate copy.

Here, the seller creates three copies of invoices. Seller handover the original copy to the purchaser and he keeps the duplicate copies with him for tax purposes.

8

Not possible to claim the tax credit

It is easy to claim the tax credit in tax invoices

9

It is hard to maintain the records of invoices

It is easy to maintain the books of records 

10

The seller should register their business

Here, both buyer and seller should register their business

11

Business owners are easy to understand the retail invoices

The business owners are hard to understand the tax invoices who do not belong to the tax background. 

12

Retail invoices are issued to non-taxpayers

Tax invoices are issued to taxpayers

Closing Thoughts

In this article, we discuss the tax and retail invoices, differences, and advantages. I hope you receive the right amount of information on this topic at the right time.

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