‘Tax Invoice’ is a commercial document that acts as an evidence of a sale transaction undertaken between a buyer and a seller.
It is issued by a supplier providing goods or services to the recipient or the buyer . Such a document specifies transaction details such as terms of sale, date of supply, price and quantity of goods or services, product or service description etc.
Tax Invoice is a document that a supplier uses to ask for the payment from the buyer. Thus, it acts as an important instrument under the GST law.
The GST law makes it necessary to issue tax invoice whenever a transaction takes place. This is because it not only acts as a proof of sale but also the basis for claiming ITC under GST.
Furthermore, there are different types of invoices that are issued under GST. The type of invoice to be issued depends upon the category of supplier and the goods and services supplied.
For instance, a registered person receiving advance payment for the supplies to be made is required to issue a Receipt Voucher.
Similarly, there can be cases where the supplier providing goods or services is not registered under the GST law. Further, such unregistered supplier makes supplies to a buyer registered under GST. This is the case of Reverse Charge under GST. And in such circumstances, buyer issues a Payment Voucher to the seller acknowledging the receipt of goods or services
But before understanding what is Payment Voucher and its particulars, let’s first understand what is Reverse Charge Mechanism under GST.[/vc_column_text]
What is Reverse Charge Mechanism?
There can be instances where a supplier providing goods and services is not registered under GST. However, the recipient of goods and services is registered under GST. This is the case of Reverse Charge Mechanism where an unregistered supplier provides goods and services to a registered buyer.
Since the supplier is not GST registered, he cannot issue a tax invoice for the goods and services supplied to the registered recipient. Further, such an unregistered supplier is not liable to pay GST to the government. It is the registered buyer who is required to issue a payment voucher to the supplier and pay GST to the government.
This is unlike the typical case where a taxable person (registered supplier) supplying goods and services is liable to issue a tax invoice and pay GST to the government.
What is Payment Voucher?
There are cases where a registered person under GST is liable to pay tax under reverse charge mechanism. These would include circumstances where:
- A registered person makes supplies of such nature on which tax is payable under reverse charge mechanism
- Recipient receives supplies from an unregistered person
In such cases, the registered person liable to pay tax is required to issue an invoice for the goods or services received by him from the supplier.
Furthermore, such a registered person receiving supplies is also required to issue a Payment Voucher to the supplier at the time of making payment.
Thus, Payment Voucher is a type of GST invoice which is issued by a registered person liable to pay tax under Reverse Charge. Further, the payment invoice is an evidence of goods and services received by such a registered person from the supplier.
Payment Voucher Example
Kapoor Cotton Mill located in Mumbai purchased raw cotton from Sham Cotton for Rs 2 Lakhs in Delhi at the rate of 5%. In this circumstance, Kapoor Cotton Mill will have to pay GST under reverse charge. Hence, CGST and SGST would be applicable on reverse charge basis of Rs 10,000 (5% of 2,00,000).
Further, Kapoor Cotton Mill would also issue a Payment Voucher to Sham Cotton for Rs 2 Lakhs.
Payment Voucher Particulars
Following are the particulars to be mentioned in Payment Voucher:
- Name, Address and GSTIN of the supplier if registered
- Serial Number which is unique for the financial year
- Date of issue of Payment Voucher
- Name, Address and GSTIN of the recipient
- Description of goods and services
- Amount paid to the supplier
- GST Rate (Central Tax, State Tax, Integrated Tax, Union Territory Tax or CESS)
- Amount of GST payable with regards to taxable goods and services (Central Tax, State Tax, Integrated Tax, Union Territory Tax or CESS)
- Place of Supply together with the name of the State and its code in cases where inter-state supply is made.
- Signature or Digital Signature of the Supplier or his authorized representative.