Guide on Tax invoices, Debit and Credit notes under GST

This guide will take you through Tax invoice requirements along with Debit Note and Credit notes as required to be furnished under CGST Act, 2017. Tax invoice is a document that every registered person should generate at the the time as prescribed under the act.

This guide contains the following topics:

1. Tax invoice
2. Prohibition of unauthorised collection of tax
3. Amount of tax to be indicated in tax invoice and other documents
4. Credit and debit notes

Chapter VII of CGST Act, 2017 contains section 31 to 34 which provides the tax invoice and related compliance. For better understanding in this guide I will first explain what is contained in Act and rules issued by government and thereafter a summary in layman terms explaining the requirements.

You can read this full guide (recommended) or skip to a particular topic.

Tax invoice under GST

A registered person who is into supplying of goods, should issue a tax invoice at the time of:

1. removal of goods for supply to the recipient, where the supply involves movement of goods; or
2. delivery of goods or making available thereof to the recipient, in any other case,

Tax invoice should contain description of goods, quantity and value of goods, tax charged and other particulars as may be prescribed.

A registered who is into supply of taxable service shall issue tax invoice before or after the provision of service but within a prescribed time. Tax invoice should contain description of service, value charged, tax charged and other information as may be prescribed.

A registered person upon fulfilling certain condition need not to issue tax invoice if value is less than Rs. 200.

Tax payers paying taxes under section 10 ( Composition Levy ) cannot issue a tax invoice, instead they should issue a bill of supply.

Any registered person, when he receives any money as advance payment against any supply of goods or services or both, should issue a receipt voucher or any other document confirming the receipt.

Subsequently if no supply is made against advance received, then person may issue a refund voucher

A registered person who is liable to tax, if he receives any supply of goods or services or both from any person who is not registered on the date of receipt of supply, a tax invoice should be issued by recipient of goods or services or both.

The recipient of goods should issue payment voucher at the time of making payment to the supplier.

In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.

Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––

• where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment;
• where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment;
• where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event

In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.

Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.

Explanation.––For the purposes of this section, the expression “tax invoice” shall include any revised invoice issued by the supplier in respect of a supply made earlier.

Prohibition of unauthorised collection of tax

Section 32 of CGST Acts, 2017 provides that a person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act.

No registered person shall collect tax except in accordance with the provisions of this Act or the rules made thereunder.

Amount of tax to be indicated in tax invoice and other documents

Section 33 of CGST Act, 2017 provides that notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made.

Credit and Debit notes under GST

 If you have issued a tax invoice for supply of goods or services or both, and if later on it is found out that the amount or tax charged was higher or goods are returned or goods or services are found to be deficient, you may issue a credit note.

You can issue credit notes for a financial year in any month but not after September following the end of the finance year in which supply was made or the date of furnishing annual return whichever is earlier. For example, if you made a tax invoice in Feb 2018, you can issue a credit note only upto September 2018 and not letter on.

You cannot reduce the impact of output tax if incident of tax and interest there on has been passed to any other person.

Similarly if in any tax invoice you have charged less value or charged less tax, then you should issue a debit note containing details as may be prescribed.

Details of debit notes issued should be declared in return filed for the month during which such debit note was issued.