Indian GST Documentation: Invoices, E-Invoices, and Notes, Explained.

The Indian Goods and Services Tax (GST) framework relies heavily on legally compliant documents, including tax invoices, e-invoices, credit notes, and debit notes, which form the basis for compliance and the flow of Input Tax Credit (ITC).

Here is a comprehensive overview of the GST invoice and e-invoice framework, drawing on the provisions of the CGST Act and Rules:

1. The GST Tax Invoice Framework (Section 31 read with Rule 46)

The tax invoice is the fundamental document required for every supply. Section 31 of the CGST Act outlines when a registered person must issue a tax invoice.

Mandatory Time Limits for Issuance

1. Supply of Goods: A tax invoice must be issued before or at the time of removal of goods (if movement is involved), or before or at the time of delivery or making the goods available to the recipient (if no movement is involved).

2. Supply of Services: The invoice must be issued before or after the provision of service, but within a prescribed period. The general prescribed period is thirty days from the date of supply of service (or forty-five days for insurers, banking companies, and financial institutions, including NBFCs).

3. Continuous Supply of Services: The time limit varies based on the contract: 

   • Due date ascertainable: On or before the due date of payment.

   • Due date not ascertainable: Before or at the time of receipt of payment.

   • Payment linked to event/milestone: On or before the date of completion of that event.

4. Goods sent on Approval: The invoice must be issued before or at the time of supply, or six months from the date of removal, whichever is earlier.

Mandatory Contents of a Tax Invoice (Rule 46)

Subject to Rule 54 (special cases), a tax invoice must contain numerous particulars, including:

• Name, address, and GSTIN of the supplier.

• A consecutive serial number (max 16 characters, unique for a financial year) and the date of issue.

• Name, address, and GSTIN or UIN of the recipient (if registered).

• HSN Code for goods or services.

• Description, quantity, and total value of supply.

• Taxable value (accounting for discount or abatement, if any).

• Rate and amount of tax charged.

• Place of supply along with the State name/code (for inter-State supplies).

• Indication of whether tax is payable on a reverse charge basis.

• Signature or digital signature of the supplier. (Note: Signature is not required for electronic invoices issued under the IT Act, 2000).

2. E-Invoice Framework (Rule 48(4) and Notifications)

E-invoicing is a system where the supplier registers the invoice details with the government's Invoice Registration Portal (IRP) to generate a unique Invoice Reference Number (IRN). 

The current limit for mandatory e-invoicing under GST is a turnover of ₹5 crore—applicable to all businesses with an annual aggregate turnover of ₹5 crore or more in any financial year from 2017-18 onwards, effective from 1 August 2023. Previously, the threshold was ₹10 crore, and the scope has been gradually reduced over time.

E-Invoice Applicability and Validity

• Mandate: Certain classes of registered persons (based on aggregate turnover) are notified to prepare invoices by obtaining an IRN after uploading the required information contained in FORM GST INV-01 to the Common GST Electronic Portal.

• Non-Compliance: If a mandated person issues an invoice in any manner other than specified in Rule 48(4) (i.e., without an IRN), that document shall not be treated as an invoice.

• Threshold: The mandate for e-invoicing has been expanded through various notifications. As per an advisory dated November 5, 2024, taxpayers with an Aggregate Annual Turnover (AATO) of ₹10 crores or more are required to report their e-Invoices (including credit notes and debit notes) to the IRP within 30 days of the document date, effective from April 1, 2025. 

• Scope: E-invoicing covers Business to Business (B2B), Business to Government (B2G), Export Invoices, Reverse Charged Invoices, Credit Notes, and Debit Notes. Business to Consumer (B2C) invoices are generally not allowed for IRN generation.

• Exclusions: Certain entities are excluded from the mandatory e-invoicing requirement, including: Insurers, banking companies, financial institutions (including NBFCs), Goods Transport Agencies (GTA), passenger transport service providers, multiplex theatres, SEZ units, Government departments, and local authorities.

IRN, QR Code, and Data Flow

• IRN and QR Code: The IRP validates the invoice details, generates the IRN, digitally signs the invoice, and creates a Quick Response (QR) code embedded with the IRN.

• Mandatory QR Code: The tax invoice must contain the QR code having the embedded IRN, where the invoice has been issued under Rule 48(4).

• Movement of Goods: Where an e-invoice (Rule 48(4)) has been generated, producing the QR code with the embedded IRN electronically for verification by the proper officer is sufficient in lieu of carrying a physical copy of the tax invoice during the movement of goods.

• Auto-Population: Documents (invoices, debit notes, credit notes) reported on the IRP are automatically transmitted to the GST system, typically within two days, and are auto-populated in the respective tables of the supplier's GSTR-1. This auto-population is based on the Document Date.

3. Credit Notes (Section 34(1) and (2))

A credit note is a document issued by the supplier (registered person) to the recipient to reduce the taxable value or tax charged on a supply.

Circumstances for Issuance

A credit note may be issued only when:

1. The taxable value shown in the original invoice exceeds the actual taxable value of the supply.

2. The tax charged in the original invoice exceeds the tax payable on the supply.

3. The goods supplied are returned by the recipient.

4. The goods or services supplied are found to be deficient.

Declaration and Time Limits

• Declaration Deadline: The details of the credit note must be declared by the supplier in the return for the month of issue, but not later than the 30th day of November following the end of the financial year in which the supply was made, or the date of furnishing the relevant annual return, whichever is earlier.

• Tax Adjustment: No reduction in the supplier's output tax liability is permitted if the incidence of tax (and interest) has been passed on to another person, or if the registered recipient has not reversed the attributable input tax credit, if availed.

• Financial Credit Notes: Credit notes issued purely for financial or accounting adjustments, where there is no change in the taxable value/tax amount, are generally not relevant documents for GST purposes and do not need to be uploaded on the common portal.

Prescribed Particulars (Rule 53(1A))

A credit note must contain specific particulars, including:

• Name, address, and GSTIN of the supplier.

• The nature of the document.

• A consecutive serial number and date of issue.

• Recipient details (name, address, GSTIN/UIN).

• Serial number(s) and date(s) of the corresponding tax invoice(s) or bill(s) of supply.

• The value of taxable supply, rate of tax, and the amount of tax credited to the recipient.

4. Debit Notes (Section 34(3) and (4))

A debit note is a document issued by the supplier to the recipient to increase the taxable value or tax charged on a supply. The expression "debit note" explicitly includes a supplementary invoice.

Circumstances for Issuance

A debit note must be issued when:

1. The taxable value shown in the original invoice is lesser than the actual taxable value of the supply.

2. The tax charged in the original invoice is less than the tax payable on the supply.

Declaration and Time Limits

• No Time Limit: Unlike credit notes, there is no statutory time limit for the issuance or declaration of a debit note in the return.

• Declaration: Details of the debit note must be declared by the supplier in the return for the month during which it is issued, and the tax liability is adjusted accordingly.

• ITC Availability: The recipient can claim ITC on the basis of a debit note. Critically, the date for calculating the time limit to claim ITC (Section 16(4)) operates from the date of the debit note, not the date of the original invoice.

• Prohibited ITC Endorsement: Any invoice or debit note issued regarding tax payable due to demands confirmed under Section 74 (fraud/willful misstatement/suppression) or in cases related to Section 129/130 (detention/seizure/confiscation) must prominently contain the words "INPUT TAX CREDIT NOT ADMISSIBLE".

Conclusion:

The entire system of GST documentation—from the mandatory fields on a tax invoice to the use of IRNs in e-invoices and the strict deadlines for adjusting liability via credit notes—works like a digital nervous system. If the nerve signals (invoices and related documents) are incomplete or delayed, the body (the seamless flow of credit and compliance) malfunctions, leading to denial of benefits or penalties for the taxpayers involved.

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