One of the most significant reforms taken by our country to date is the implementation of GST. Since then there have been a lot of discussions going around this topic. And the most prominent would be around GST invoices/ Tax invoices.
In this blog, we are going to discuss the essential rules and guidelines that every business should follow while issuing a GST invoice. So keep reading!
What is a GST invoice?
If you are a GST-registered business owner, you are already familiar with what a GST invoice is. But to all the clients that buy goods and/or services from GST-registered businesses, here you go!
A GST invoice or a tax invoice is an invoice issued by the seller to the buyer which contains all the tax details such as cGST, sGST, and iGST along with a list of goods and/or services purchased by the buyer.
Do All Businesses Need to Issue GST Invoices?
As per the government rule in India, all businesses with a registered GST number should issue a GST invoice to their clients. Any enterprise that isn’t a GST-registered business, need not have to issue GST invoices and can rather opt for regular invoices.
Here are a few things that you should include in a GST invoice
Things to Include in a GST Invoice
As per rule 54 of the cGST act of 2017, here are the mandatory items that should be included in a GST invoice:
- Name of the seller
- the physical address of the seller
- Invoice number
- Date of issue of the invoice
- Invoice type (check out our blog for the different types of invoices that every business should know)
- Shipping and billing address of the customer
- Name of the customer
- GSTIN of the customer if they are registered too
- Details of products and services provided, including description, quantity, etc.
- SAC code or HSN code
- The rate of CGST, IGST, UTGST, and SGST charged
- Total tax amount and discounts, if any
- Reverse charge
- Signature of the invoice issuer
Now you know what are all the essential components of a GST invoice, let us now take a look at the rules to be followed while issuing an invoice
GST Tax Invoice Rules
✅GST Invoice Serial Number Rules
Following are the mandatory rules while providing serial numbers in an invoice:
- The invoice numbers must be sequential or consecutive in chronological order.
- The invoice number should be a combination of alphanumeric and should be unique for every financial year.
- It should.t exceed the limit of 16 characters.
- The GST/ tax amount should be split as state GST, central GST, and international GST and should not be mentioned as a whole.
An international GST is charged when the transactions are made internationally, a state GST when transactions are made across different states and a Central GST should be issued.
✅GST Invoice Signature Rules
Since the signature of the invoice issuer is a mandate in the GST invoice, here are a few rules that are related to the signature:
- The invoice or bill can be signed either digitally or by hand.
- The invoice should always be signed by the GST representative or an authorized person of the representative. The authorized person can either be a company secretary, practicing advocate, charted accountant, a retired officer from the tax department, or an employee appearing on behalf of the seller.
✅GST Invoice Payment Rules
In case the supplier is an unregistered seller, here are a few that needs to be followed. There can be two cases in this situation
- Number 1, you buy from an unregistered buyer
- You buy goods/services that are exempted from GST.
- In case you, the registered buyer, buy from an unregistered seller, the buyer can issue a tax invoice
- In the case of exempted goods or services, the seller has to issue a bill of supply instead of a tax invoice.
If you are wondering why all these rules are quite difficult to keep in mind and extensive to practice every time you issue an invoice, the government has also provided outlines regarding the time of issue of a GST invoice.
✅When to issue a GST invoice?
Based on the goods or services that you sell, the time limit varies. Here’s a brief about the timeline.
i) For Goods
In the case of a normal supply of goods, it is mandatory to issue an invoice or bill after the item is purchased by the buyer or dispatched from the seller. The same is also defined under Section 2 (96) of the principal act.
In case of a continuous supply of goods, an invoice should be issued before receiving the payment.
ii) For Services
- For general services excluding financial services, the invoice should be issued within 30 days of rendering the service(s).
- In the case of financial services provided by banks, NBFCs, and other financial institutions, the issue of invoice extends up to 45 days after rendering the financial service(s).
✅Revising Invoices Issued Before GST
In any case, if you have generated an invoice with mistakes or errors, you don’t have to worry about it because the government has created a set of rules in case of mistakes being done on invoices.
- When you apply to become a registered seller, you need to apply for provisional registration before getting a permanent certificate.
- All sellers should also issue a revised invoice against an original invoice after the date of issue.
- There is also a time limit of one month to issue this revised invoice.
- This revised invoice should have mentioned that it is a “revised invoice” on it along with all the rules mentioned above for a
- This revised tax invoice under GST must have “Revised Invoice” mentioned on it, along with all the mandatory details of a tax invoice as already discussed.
✅How Many Copies of Invoices Should a Supplier Issue?
It may sound simple, but there are also rules on the number of copies of the invoice to be issued. Here’s what you have to know about the number of copies of the invoice:
1. For goods
In case of goods being sold, the seller has to issue three copies of the invoice
- One for the buyer
- One for the seller
- A duplicate that should be kept with the seller
2. For services
In the case of services being rendered by the seller, the seller has to issue two copies of the invoice.
- One for the buyer
- And one for the seller.
There you go! In case you haven’t registered your business, go register yourself now as these GST invoices come with the benefit of tax credits. In case you are a small business owner, we bet that registering yourself as a registered business can help you avail a lot of provisions from the government.
And to make sure that you are filing and saving all these tax invoices safely and securely, we have an, even more, easier solution for you! Introducing our end-to-end encrypted cloud-based software to store your invoices most securely. You can also automate the invoices to have a smooth cash flow in your business. Check out our software now!