What Is a GST Invoice? – Rules, Format & Payment

Introduction

A Goods and Services Tax (GST) invoice - often called a “GST bill” - is the official document issued by a GST-registered supplier to a buyer when goods or services are supplied. It records what was sold, how much, the applicable tax, and payment terms. For businesses, it’s not just a bill - it’s a legal proof required for tax compliance, claiming input tax credit, and maintaining correct accounting. Whether you are a trader, supplier, or service provider, knowing what a valid GST invoice should look like and when to issue it is fundamental for smooth GST operations in India.

What Is a GST Invoice?

• Under the GST regime, a “GST invoice” (or “tax invoice under GST”) refers to the invoice required under the Central Goods and Services Tax Act, 2017 (CGST Act). -
• It is issued by a GST-registered supplier upon supplying taxable goods or services (or both), or upon receipt of advance payment in certain cases.
• For exempt supplies (or by those under a composition scheme), instead of a GST invoice, a “bill of supply” must be issued. -
• The GST invoice serves as legal proof of supply - essential for the buyer to claim input tax credit (ITC) and for maintaining compliance.

Thus, a GST invoice isn’t just a bill - it’s a legally mandated record under GST law that tracks the supply, tax charged, and parties involved.

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Who Must Issue a GST Invoice & When

• Any person registered under GST - whether a small trader or large business - must issue a GST invoice when supplying taxable goods or services.

• If the supplier deals only in exempt supplies or opts for the composition scheme, then a “bill of supply” (without GST tax details) is issued instead of a GST invoice. -

• Timeline:

  • For goods: Invoice should be issued before or at the time of removal of goods (if supply involves movement), or at delivery / making goods available to the recipient.
  • For services: Invoice must be issued within 30 days from the date of supply (unless other rules apply).

• For very small supplies to an unregistered buyer (value under ₹200) - issuing a GST invoice may not be mandatory; in such cases, a consolidated invoice at the end of the day may be issued.

What a GST Invoice Must Contain: Mandatory Fields & Format

While there is no rigid “one-size-fits-all layout,” GST invoices in India must include certain mandatory details as prescribed under the CGST Rules (Rule 46).

Here’s a breakdown of essential components:

Field / Detail

What It Should Include

Supplier Information

Name, address, and GSTIN of the supplier.

Recipient Information

Name, address, and - if registered - GSTIN of recipient.

Invoice Number & Date

A unique serial invoice number (max 16 characters) and date of issue.

Description of Goods/Services

Description, HSN code (for goods) or SAC code (for services), quantity (goods), unit, etc.

Value Details

Taxable value (after discount/abatement, if any), total value of supply.

Tax Details

Tax rate(s), tax amount - CGST + SGST (intra-state) or IGST (inter-state), cess if applicable.

Place of Supply & Delivery Address

For inter-state supplies, state name & code; delivery address if different from billing address.

Reverse Charge (if applicable)

Indicate if tax is payable on a reverse charge basis.

Signature / Digital Signature

The invoice must bear a signature or an authorised signatory (or digital signature).

Additional data - such as discounts, shipping/transport info, order/PO numbers - can also be added to help business documentation and clarity, though they are not strictly mandatory under GST law.

Many businesses use invoice-generating software or templates (Excel, PDF, or e-invoicing tools) customized to their needs while ensuring all mandatory fields are covered.

GST Invoice vs. Bill of Supply vs. Other Documents

Under GST, different documents may be issued depending on the type of supply or taxpayer:

• GST Invoice / Tax Invoice: Issued for taxable supplies by registered taxpayers. Enables buyer to claim Input Tax Credit (ITC).
• Bill of Supply: Issued when a supplier deals only in exempt supplies or is under the composition scheme - no GST is charged, so no tax components are included.
• Proforma Invoice / Commercial Invoice / Export Invoice: Used in special cases - e.g. export, customs, international trade - but final GST invoice (or appropriate document under GST) must be issued when supply completes.

Thus, whether you issue a “GST invoice” or “bill of supply” depends on your GST registration status and the nature of goods/services supplied.

Why GST Invoice Matters - Legal, Accounting & Compliance Roles

1. Legal Evidence of Supply: It legally proves that a supply of goods/services has taken place - helpful in case of audits, disputes, or legal proceedings.
2. Input Tax Credit (ITC): For a buyer who is GST-registered, a proper GST invoice is necessary to claim ITC on the GST paid. Without valid invoice details, the ITC claim may be disallowed.
3. Tax Compliance & Reporting: Suppliers must maintain invoice records to file GST returns, reconcile sales, and comply with statutory requirements.
4. Transparency & Accounting Discipline: A detailed invoice - with item-wise breakdown, HSN/SAC codes, taxes, and place of supply - ensures transparency and avoids confusion between buyer and seller, especially in B2B and inter-state trades.

E-Invoicing & Modern GST Invoice Compliance (2024–2025)

• For businesses crossing a certain threshold (turnover ₹10 crore or more), e-invoicing is mandatory for B2B domestic supplies and exports.
• Once generated, e-invoices get a unique Invoice Reference Number (IRN) and QR code from the central portal, making them machine-readable and auditable.
• The mandatory fields remain the same as earlier - GSTINs, invoice number/date, HSN/SAC codes, tax breakdown, etc.

Payment & Accounting with GST Invoices

• The invoice acts as the basis for payment demand, showing how much the buyer owes (taxable value + GST + any additional charges).
• After payment, the invoice may function as a receipt. In B2B setups, suppliers and buyers use GST invoices to reconcile books, compute liability/credit, claim ITC, and file GST returns.
• If supply is exempt or under the composition scheme (thus only “bill of supply”), no GST is involved - so buyer can’t claim ITC.
• Non-issuance or incorrect invoice may lead to denial of input tax credit, legal compliance issues, and penalties under GST. -

Common Mistakes & What to Avoid

• Not including GSTIN of supplier or recipient - this renders the invoice invalid for ITC.
• Missing HSN/SAC code (when required) or incorrect tax rate declaration - leads to wrong tax computation or compliance issues.
• Delay in issuing invoice - especially for services (should be within 30 days) - can violate provisions.
• Treating retail/consumer bills as GST invoices - but only “registered person/business customer” invoices can be used for ITC. For consumer sales, a simple bill suffices.
• For exempt supplies or composition scheme suppliers issuing a “GST invoice” - incorrect; they should issue a “bill of supply” instead. -

Best Practices for GST Invoices

• Use consistent, sequential invoice numbering for each financial year.
• Maintain accurate records - supplier & buyer GSTINs, HSN/SAC codes, tax rates, place of supply. This helps in compliance, audits, and ITC claims.
• For businesses above threshold: implement e-invoicing with IRN & QR code so invoices are digitally traceable & compliant.
• Issue invoice promptly - for goods before dispatch/delivery; for services within 30 days.
• Store invoice copies (physical or digital) safely - necessary for at least 6 years (as per statute) for audits.
• If goods/services are exempt or under composition - use “bill of supply” rather than GST invoice.