Under the Goods and Services Tax (GST) system in India, issuing a tax invoice is mandatory for registered suppliers of goods and services. The Central Goods and Services Tax (CGST) Act clearly outlines when and how to issue tax invoices. These rules ensure transparency, help track tax payments, and support compliance under section 31 of GST Act.
Is Issuing Tax Invoices for Goods Mandatory
A registered person supplying taxable goods must issue a tax invoice. This is either at the time of removing the goods if the supply involves movement. It maybe at the time of delivery or when the goods are made available to the recipient in other cases. The invoice must include the description of goods, quantity, value, and the applicable tax charged. The government, based on the GST Council’s recommendation, can notify specific categories of goods or supply types where the invoice can be issued within a different time frame as prescribed.
Is Issuing Tax Invoices for Services Mandatory
For taxable services, the registered supplier must issue a tax invoice either before or after the service is provided, but within the time frame prescribed by rules. The invoice must show the description of the service, the value, and the tax charged. The government may notify specific services where other documents can act as tax invoices. They may exempt some services from requiring an invoice, subject to conditions.
What Are The Special Situations for Invoicing
In some cases, the rules for issuing invoices differ. A registered person can issue a revised invoice within one month from the date of receiving the registration certificate. This is for supplies made from the effective date of registration. If the value of the supply is less than two hundred rupees, a tax invoice may not be required. This is depending on prescribed conditions. Suppliers of exempt goods or services and those under the composition scheme must issue a bill of supply instead of a tax invoice. Even this bill of supply is not needed for supplies valued under two hundred rupees, if certain conditions apply.
If a supplier receives an advance payment, they must issue a receipt voucher acknowledging the payment. If no supply follows the advance, a refund voucher should be issued. When a registered person is liable to pay tax under reverse charge mechanisms under Section 9(3) or 9(4). They must issue an invoice for goods or services received from unregistered suppliers. At the time of making payment to such suppliers, a payment voucher must also be issued. For clarity, the law explains that suppliers registered only for tax deduction are under Section 51. They are treated as unregistered in this context.
What About Continuous Supply of Goods and Services?
In the case of continuous supply of goods, the payment or account statements occur regularly. Hence the supplier must issue an invoice before or at the time of each payment or statement. For continuous supply of services, the contract may mention a due date for payment. The invoice must be issued on or before that date. If the contract does not specify a due date, the invoice must be issued at the time the supplier receives the payment. If the payment depends on the completion of a particular event, the invoice should be issued on or before the date the event is completed.
What If Service Contracts Ending Early
If a contract for service supply ends before full completion, the supplier must issue an invoice at the time the supply ends. This invoice must reflect the value of services provided up to that point.
Sale or Return Transactions
When goods are sent on approval for sale or return, and the supply has not yet occurred, the supplier must issue an invoice. This is either at the time of supply or within six months from the date of removal of goods. Whichever is earlier.
Conclusion
Tax invoice rules under GST are designed to promote clarity and compliance. Whether dealing with goods, services, or special scenarios like advance payments or continuous supplies, registered persons must follow the guidelines for timely and accurate invoicing. These provisions help in smooth GST administration and prevent tax evasion while making the system more accountable for all parties involved.
