Invoices are central to the GST regime. In the past invoices were needed for a business to get paid. In GST, every purchase by a business needs to match with a sale by another business – invoices therefore, become key for businesses to avail of various benefits under GST and for filing returns.
When should an invoice be raised
Any registered business who supplies a product or service should raise an invoice under GST. There are some special cases when an invoice needs to be raised even though a “sale” might not be involved.
- By a business on itself – reverse charge – when its supplier is not registered under GST.
- Movement of goods between two branches of a business in different states
There are also cases when an invoice need not be raised even if a sale is involved. For example, if the recipient of a sale is not registered and does not need an invoice, the supplier may choose not to send an invoice for each transaction. Instead, the supplier can provide a consolidated invoice for all transactions.
An invoice for a service needs to be raised within 30 days of delivering the service. An invoice for a product needs to be raised before or at the time of movement of goods.
What should be included in an invoice
The GST Council has specified the mandatory information that needs to be included in an invoice. These include
- GSTIN of the supplier
- GSTIN of the customer
- HSN or SAC code of the product(s) or service(s) respectively
- Description, value, amount and tax rates of product(s) or services(s) delivered
- Place of supply
An invoice needs to be issued in triplicate for sale of goods and in duplicate for services delivered.
What GST to apply
GST specifics 3 taxes – SGST (State GST), CGST (Central GST) and IGST (Integrated GST). As a general rule, sale of goods or service within an state will attract SGST and CGST, while sales of goods and services from one state to another will attract IGST. However, it can be often tricky to determine exactly which taxes will apply depending on the nature of sale (movement of goods and services between branches in two states) and place of supply (delivery of digital service across multiple locations at the same time). Businesses should consult their accountant(s) to determine the specific tax application for each transaction.
Finally, businesses need to upload their invoice details to the GSTN (GST Network). The invoice itself does not need to be uploaded to GSTN – all that is needed is the transaction details to be made available to the GSTN.