For executing a transaction, invoicing plays a pivotal role. It is an important document that forms the basic layer of recording all the sale/purchase of accounting books. The Government has shared the draft/ format of invoicing for Goods and Service Tax under GST (GST INV-01) and it covers prime elements of supplier’s details, GST tax rate and more particulars required in an invoice. Lets begin this post with ‘how invoices were issued pre-GST’ and, then move on to an understanding of ‘how invoicing is done under GST regime.’
In the current tax regime, two types of tax invoice are issued:
1. Tax Invoice (Excise and VAT Invoice) and,
2. Retail or Commercial Invoice
Tax Invoice: This type of tax is issued to registered dealers. It includes details of the supplier and the recipient of the invoice and can be used to claim input tax credit. Two main types of Tax Invoices issued are:-
Retail or commercial invoice
This is issued to an unregistered dealer or retail customer and the VAT charged in the bill is shown separately. Since it is issued to the ultimate consumer who has the final liability to pay the tax, and tax credit is not to be passed on — hence,there is no tax credit available on this invoice.
Invoicing under GST
In the GST India regime, two types of invoices will be issued:
1. Tax invoice
2. Bill of supply
A tax invoice is issued when a registered taxable person supplies taxable goods or services. The Government has shared the draft/ format of invoicing for Goods and Service Tax under GST (GST INV-01), you can refer to the table mentioned below:-
Bill of Supply
Under GST, if a supplier is involved in the supply of exempted goods/services, or is paying tax under composition scheme, in such instances the supplier is not allowed to charge any tax. Therefore, a Tax invoice can’t be issued. In such cases, another document called Bill of Supply is issued.
How many copies of Tax Invoices are to be issued?
When goods are supplied, the supplier is required to issue three copies of the invoice– Original, Duplicate, and Triplicate.
Copy 1 – Original Invoice: To be issued to the buyer, marked as ‘Original for Recipient’
Copy 2 – Duplicate Invoice: To be issued to the transporter (carrier of goods), marked as ‘Duplicate for Transporter.’ The transporter doesn’t need to carry the invoice if the supplier has obtained an invoice reference number.
Copy 3 – Triplicate Invoice: To be issued and kept with the supplier.