GST Invoice Types: When and How to Use Them
The management of the Goods and Services Tax (GST) in India comes with its share of complexities and compliance requirements. Enumerated among them is the necessity to prepare and apply certain kinds of GST invoices depending on the kind of transaction. These invoices are useful when it comes to proper payment of taxes, adherence to the stipulated tax regulations and documentation. In this blog, we will look at the various forms of GST invoices, when you should use them, and why they are invaluable to your enterprise.
1. Regular GST Invoice (Tax Invoice)
The most popular type of GST invoice is a standard or regular GST invoice which is often called a tax invoice. This invoice is issued for the supply of taxable goods or services by a registered GST taxpayer.
When to Use:
When supplying goods or services to another registered person – financiers, investors, etc.
For business to business (B2B) transactions.
To claim Input Tax Credit (ITC).
Key Information on a Regular GST Invoice:
The supplier’s name, address and their GST Identification Number(GSTIN)
The Recipient’s name, address, and GSTIN.
A unique invoice number.
Date of issue.
Description of goods or services supplied.
Quantity, value, and tax rate applied.
The amount of GST charged (CGST, SGST, IGST).
HSN code for goods or SAC code for services.
2. Bill of Supply
A Bill of Supply is also used when there is a supply of goods and services that are zero-rated or GST exempt or a Bill of Supply is issued when GST is not applicable, either due to the supply of exempt goods/services or when a supplier is registered under the Composition Scheme.
When to Use:
For exempted goods or services.
when the business is registered under GST but is not eligible to charge tax, such as those under the Composition Scheme or supplying exempt goods.
In case of supplies under reverse charge mechanism (RCM).
Key Features:
Does not mention the GST amount since there is no tax liability.
The format is simpler than a tax invoice.
3. Receipt Voucher
A Receipt Voucher is prepared by the supplier when the receives an amount as an advance of the price of the goods to be sold or the services to be rendered in future. This voucher enables management to have a clear view on the collection of advance payments and track the tax responsibilities.
When to Use:
When a customer pays before he has been supplied with goods or when he has been supplied with services.
Key Features:
Should record the receipt of advance payment in the business.
GST is charged on the amount of advance.
The receipt voucher is normally accompanied by a tax invoice when the goods or services are supplied.
4. Refund Voucher
The Refund Voucher is used when a business gives back cash to the buyer over an amount that he paid earlier, for instance, because of the return of goods or cancellation of a contract.
When to Use:
In the case of a refund because of a cancellation of goods or services.
If the original invoice prepared and the customer has paid the GST, then later the particular transaction has been deleted or reverse.
Key Features:
Indicates the refund to customer and the consequential change of GST.
Must be issued in order to effect correct adjustments in the tax records.
5. Delivery Challan
A Delivery Challan is made where goods are removed without sale such as for testing, job work or on consignment. It is a paper worked on when transporting goods prior to the sale or return process.
When to Use:
To hold goods for job, work or for testing.
When goods are transporting to another branch of the same company.
In those cases, where product is transported not for sale (like for repair, inspection or job work etc).
Key Features:
No tax is included because product is not delivered because good are not being sold yet.
For transactions where the recipient is in a country other than India, and Delivery Challan does not include GST as it is not a tax invoice but may include details like the reason for transport or job work.
6. Export Invoice
If an Indian importer wants to export goods or services, an Export Invoice is created. Exporting transactions under GST are zero-rated, which means no GST is charged on export supplies, but Input Tax Credit (ITC) on inputs used for exports can still be claimed and that is to mean that no GST is chargeable on the goods or any service which is exported.
When to Use:
When selling goods or services to foreign countries or exporting goods and services to other countries.
In cases where the recipient is outside India and no GST is levied on the transaction.
Key Features:
The invoice must clearly state that the transaction is an export and include the relevant Export Declaration Number (EDN).
Since export supplies are zero-rated, no GST is charged, but ITC on inputs can still be claimed.
7. Credit Note and Debit Note
A Credit Note is issued when a business reduces the value of an invoice, such as in cases of returned goods or discounts applied after issuing the invoice or when there were returned goods, either wholly or partly. A Debit Note is an end user’s notification that the original invoice value should be increased due to return of goods or other additional services given later.
When to Use:
Credit Note: The following are common situations, which require the recovery of all or part of all the original amount charged: Returns, Excess Billing, & Discounts after the Invoice Is issued.
Debit Note: In situations when the original amount has to be, for example, raised in the case of returns or for additional services.
Key Features:
Credit notes as well as the debit notes must contain reference to the original invoice Number.
It will also lead to the change in the GST amount of the original invoice number.
8. Self-Invoice (For Reverse Charge Mechanism)
Where the recipient is liable to pay tax under RCM. The recipient creates a self-invoice only in cases where the supplier is unregistered under GST and the reverse charge mechanism is applicable.
When to Use:
When the recipient is legally allowed to discharge GST to the supplier under a reverse charge mechanism for example in certain goods and services.
Key Features:
The actual consumer of the given goods or received services is required to create the invoice and directly pay the GST to the government.
This method is widely applied where the parties received services from individuals who are not registered legal entities.
Conclusion
Businesses must understand the different forms of SK invoices and when to use them and in doing so is legal compliance can be met without incurring penalties. It makes certain that the right amount of tax has to be computed, remitted and paid on the right amount of income whether big or small. Using the correct type of GST invoice can simplify tax planning, optimize Input Tax Credit (ITC) claims, and ensure accurate GST return filing and compliance with GST laws.
The details and compliance that are required for GST are still complex and one can contact The Legal Dost for a better legal help. Our company offers professional services which seek to assist companies in understanding the principles of GST with a view of facilitating them in adhering to the right procedures and time expected of them by the authorities when filing their taxes.