GST Tax Invoice, Debit, and Credit note

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Hi, friends today in this article we are going to learn about the GST tax invoice, Debit, and Credit Notes. So, if you are a business person, then you should have knowledge about Tax Invoices and Debit and credit notes. 

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What is a tax invoice?

So, in the GST we need to issue invoices as per the provision of Section 31 of the CGST Act, 2017.

When do we need to issue Tax invoices?

All the person who has registered under the GST, need to issue a tax invoice at the time of supply of goods and services and at the time of receiving of goods and services.  (In the case of the RCM reverse charge mechanism)

What if a person is in a business of supply of exempted goods or services.

So, as per the GST Act, if any person is in the business for the supply of the exempted goods, then he needs to issue a Bill of supply instead of a Tax invoice. The same provision is applicable to the composite suppliers.

Why Tax invoice or Bill of supply needs to be issued by a registered person.

• A tax invoice is an essential document for the recipient (buyer) to avail of input tax credit (ITC). 
• A tax invoice is an important document to determine the time of supply. 
• There is no prescribed format for the Tax Invoice. Only certain fields are prescribed as mandatory fields. 
• Tax Invoices can be issued manually or electronically. Issuance of electronic invoices is not mandatory as per the law, we can make tax invoices as per our business requirement and customize them in the ERP or Tally software.
• It is not necessary that only a person supplying goods or services is needed to issue a tax invoice. Under the GST Act, any registered person buying or consuming the goods or services from an unregistered person needs to issue a payment voucher at the time of making payment & tax invoice on the date of receipt of the goods and services.

Note: No Invoice or bill of supply for the value of supply less than < Rs. 200, (some Terms & Conditioned need to be followed in this case as per Sec. 31 (3)

CONTENTS OF TAX INVOICE [No particular format is prescribed] 

1. Name, address and GSTIN of the supplier (seller). 

2. Tax invoice Nos. should be a consecutive continuing number (not surpassing 16 characters, in one or multiplied series, comprising alphabets or numerals or special characters & any mixture thereof, unique for a Financial Year). 

3. Date of tax invoice issue. 

4. If the recipient (Buyer) is registered - Name, address, and GSTIN or UIN of the recipient. 

5. If the recipient (Buyer) is unregistered & value of taxable supply is≥ Rs. 50,000: The name & Address of the recipient & address of delivery, along with the name of the State and State code. 

6. If the recipient is unregistered & value of taxable supply < Rs. 50,000

 Name & address of the recipient and the address of delivery, along with the name of the State and its code (if the recipient requests that such details be recorded in the tax invoice). 

7. Harmonised System of Nomenclature (HSN) code for goods or services. Annual Turn over in last Financial year 

up to 1.5 Crore  nil

 > 1.5 Crore     02 Nos ''72''

& up to 5 Cr > 5 Crore No. of Digits of HSN Code 04  nos. "7209''

8. Description of goods or services. 

9. Quantity of goods and unit or Unique Quantity Code thereof e.g. KGS, NOS, etc. 

10. The total value of the supply of goods or services or both. 

11. The taxable value of supply of Goods or Services taking into account discount or abatement, if any. 

12. Rate of tax (CGST, SGST, IGST, UTGST, or GST cess (if applicable)). 

13. Amount of tax charged in respect of the taxable goods or services  (CGST, SGST, IGST, UTGST or GST cess). 

14. Place of Supply along with the name of State (in case of inter-State supply). 

15. Address of delivery in case of difference from the place of supply. (Bill to Ship to the transaction)

16. Whether the tax is payable on a reverse charge basis. (yes / No)

17. A signature or digital signature of the supplier or his authorized representative. 

Note: Signature or digital signature shall not be required in the case of issuance of the electronic invoice.

IN WHICH MANNER DO WE NEED TO ISSUE TAX INVOICES [AS PER RULE 48 OF CGST ACT, 2017]
Goods In Triplicate
 Original for Recipient
 Duplicate for Transporter
 Triplicate for Supplier
Services In Duplicate
 Original for Recipient
 Duplicate for Supplier

Note: A serial number of invoices that need to be issued during a year shall be furnished electronically in GSTR-1.
BILL OF SUPPLY 

[Sec 31 (3) (c) of CGST Act, 2017 r/w Rule 49 of CGST Rules 2017]
 The Bill of supply is similar to the tax invoice except that bill of supply does not contain any tax amount.
 A bill of supply is issued in cases where tax cannot be charged: Composite scheme or exempted goods supply
 A registered person who has opted to pay tax under Notification No 02/2019. 

CONTENTS OF BILL OF SUPPLY 

 Name, address, and GSTIN of the supplier
 A consecutive serial number (not exceeding 16 characters, in one or multiple series, containing alphabets or numerals or special characters & any combination thereof, unique for a Financial Year).
 Date of the bill of supply issue.
 Name, address & GSTIN, or UIN of the recipient (If the recipient is registered)
 Description of goods or services & Harmonised System of Nomenclature (HSN) code for Goods & Services
 The taxable value of the supply of Goods and Services taking into account discount or abatement, if any.
 The signature or digital signature of the supplier or his authorized representative.
Note: Signature or digital signature shall not be required in case of issuance of the electronic invoice. Note: If a registered person is supplying taxable & exempted Goods & Services to an unregistered person then he can issue a single “invoice cum-bill of supply” for all such supplies. 

so, now we are going to see the details regarding the Debit and the Credit notes:

CREDIT NOTE Sec 34(1) & (2)

 Where one or more tax invoice has been issued for the supply of any goods and services or both; 

 Subsequently, it is found that in respect of the such supply 

a. Taxable value in invoice > taxable value of supply; OR 

b. Tax, charged in invoice > Tax payable on such supply,

c. The recipient has returned the goods, 

d. Goods and services or both are found to be deficient Suppliers may issue one or more credit notes for supplies made in Financial Year to the recipient. 

 A registered person who issues such credit note has to declare details of such credit note in the return for the month during which such credit note has been issued but not later than 

(a) September following the end of the Financial Year in which such supply was made OR 

(b) Date of furnishing of relevant annual return (whichever is earlier) Tax liability of a registered person will be adjusted in accordance with the credit note issued. 

However, no decrease in an output tax liability of the supplier shall be allowed, if the incidence of tax & interest in such supply has been passed on to any other person. 

Note: Credit note(s) are not permitted to be issued in case secondary discounts are allowed by the supplier since the tax liability of the supplier does not get reduced in such a case. 

However, the supplier can issue financial/commercial credit note(s) to reduce the value of supply payable by the recipient to the supplier

DEBIT NOTE Sec 34 (3) & (4) 

 Where one or more tax invoice has been issued for the supply of any Goods or Services or both; 

 Subsequently, it is found that in respect of such supply 

a) Taxable value in invoice < taxable value of supply; OR 

b) Tax, charged in invoice < Tax payable on such supply, the supplier may issue one or more debit notes for supplies made in FY to the recipient. 

 A registered person who issues such a debit note has to declare details of such debit note in the return for the month during which such a debit note has been issued. 

 the tax liability of a registered person will be adjusted in accordance with the debit note issued.

So, the CMA student's tax invoice and the debit note, and the credit note rules need to understand and the same need to be observed on the practical bills whenever they receive like. Purchase of online products or purchase bills from the supermarket or any other bills. You need to check what content is available and which HSN code is applicable to the products you buy. What is the rate of tax applicable for the same?

So, this tax invoice topic is purely practical based. So the students need to do the practical observation of the tax invoices. 

Thanks for reading the article.

CMA Knowledge blog team.