Section 31 — Tax Invoice (The Most Important Document in GST)
Every registered person supplying taxable goods or services MUST issue a tax invoice. Without a valid tax invoice, your buyer CANNOT claim ITC. The invoice is the single document that creates the entire credit chain in GST.
Mandatory Contents of Tax Invoice (Rule 46)
| Field | Requirement |
|---|
| Supplier details | Name, address, GSTIN of supplier |
| Invoice number | Sequential, maximum 16 characters, unique per financial year |
| Date of issue | Date of invoice (determines time of supply) |
| Recipient details | Name, address, GSTIN (if registered), state code |
| HSN/SAC code | 4-digit if turnover Rs. 5 Cr+, 6-digit if Rs. 5 Cr+ |
| Description | Description of goods/services |
| Quantity and unit | For goods (not required for services) |
| Taxable value | Value before GST |
| Tax rate and amount | CGST, SGST, or IGST — rate and amount separately |
| Place of supply | State name and code (for inter-state: mandatory) |
| Signature | Digital signature or manual (physical invoice) |
Invoice Timing
For goods: before or at the time of removal (if involves movement) or delivery (no movement). Continuous supply of goods: before or at the time of each statement of account or payment.
For services: within 30 days from the date of supply (45 days for banking/insurance/financial). If invoice not issued in time: time of supply becomes the date of supply (not invoice date) — resulting in delayed payment = interest.
Section 34 — Credit Note and Debit Note
Credit Note: issued when taxable value or tax charged in the original invoice is found to EXCEED the actual value/tax. Reasons: goods returned, post-supply discount, rate difference, excess billing. Effect: reduces the supplier's output tax liability. Time limit: September 30 following the end of the FY of the original invoice, or the date of annual return, whichever is earlier.
Debit Note: issued when taxable value or tax charged is found to be LESS than actual. Reasons: price escalation, additional charges, short billing. Effect: increases supplier's output tax liability.
Recipient impact: when supplier issues credit note, recipient must REDUCE ITC by the corresponding amount. When supplier issues debit note, recipient can INCREASE ITC.
E-Invoice (Electronic Invoice) — Rule 48(4)
E-invoicing is mandatory for B2B and export invoices for businesses with aggregate turnover exceeding specified threshold:
| From Date | Turnover Threshold |
|---|
| October 1, 2020 | Rs. 500 crore+ |
| January 1, 2021 | Rs. 100 crore+ |
| April 1, 2021 | Rs. 50 crore+ |
| April 1, 2022 | Rs. 20 crore+ |
| October 1, 2022 | Rs. 10 crore+ |
| August 1, 2023 | Rs. 5 crore+ |
Process: Generate invoice in your accounting software → upload JSON to Invoice Registration Portal (IRP: einvoice1.gst.gov.in) → IRP validates, generates IRN (Invoice Reference Number) and QR code → invoice is valid only with IRN. Without IRN, the invoice is deemed invalid — buyer cannot claim ITC.
Auto-population: E-invoiced data auto-populates GSTR-1 (no manual entry needed for e-invoiced transactions). This reduces filing errors and reconciliation issues.
E-Invoice = ITC Validity
If your supplier is required to generate e-invoice but does not (issues a manual invoice instead), the invoice is INVALID under Rule 48(5). You CANNOT claim ITC on such an invoice. Always verify that the IRN and QR code are present on invoices received from suppliers with turnover above the applicable threshold. Many businesses have lost crores in ITC due to invalid invoices from non-compliant suppliers.
Bill of Supply — When No Tax Invoice is Needed
A Bill of Supply (not tax invoice) is issued for: (a) exempt supplies, (b) supplies by composition dealers, (c) supplies where GST is paid by recipient under RCM (some categories). Bill of supply does NOT contain tax amount — and the buyer gets NO ITC.
Disclaimer
This article is for general informational and educational purposes only. Consult a qualified Chartered Accountant, Tax Consultant, or GST Practitioner before acting. TaxClue Consultech Pvt Ltd accepts no liability. All drafts and templates are illustrative only.
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❓ Frequently Asked Questions
What is the difference between tax invoice and bill of supply?
Tax invoice is issued for TAXABLE supplies — it contains GSTIN, HSN/SAC, tax rate, and tax amount. The buyer can claim ITC using a tax invoice. Bill of supply is issued for EXEMPT supplies or by composition dealers — it does NOT contain tax amount and the buyer CANNOT claim ITC. Using the wrong document type is a compliance violation and can result in ITC denial for the buyer and penalty for the supplier.
What is e-invoice and who must generate it?
E-invoice is the electronic generation of invoices through the Invoice Registration Portal (IRP). Mandatory for businesses with aggregate turnover exceeding Rs. 5 crore (as of August 2023, threshold being progressively reduced). The supplier uploads invoice data in JSON format to the IRP, which validates it, assigns an IRN (Invoice Reference Number), signs it digitally, and returns a QR code. Without IRN, the invoice is deemed invalid — the buyer cannot claim ITC on it. E-invoiced data auto-populates GSTR-1.
What is the time limit for issuing a credit note under GST?
A credit note must be issued by September 30 following the end of the financial year in which the original invoice was issued, or the date of filing annual return for that year — whichever is earlier. Example: original invoice dated August 2025 → credit note must be issued by September 30, 2026 (or GSTR-9 filing date for FY 2025-26). After this deadline, no credit note can be issued for GST purposes — though a commercial credit note without GST implications can still be issued.
How many digits of HSN code are required on GST invoices?
Turnover up to Rs. 5 crore: 4-digit HSN code for B2B invoices (not mandatory for B2C). Turnover above Rs. 5 crore: 6-digit HSN code mandatory on ALL invoices. For export invoices: 8-digit HSN code recommended. HSN (Harmonized System of Nomenclature) is for goods; SAC (Service Accounting Code) is for services. The correct HSN/SAC determines the applicable GST rate — wrong code can mean wrong rate, leading to demands or excess payment.
Can I issue a revised invoice under GST?
Revised invoices can only be issued for invoices issued between the date of obtaining registration and the date of actual issuance of registration certificate — essentially for the gap period. After the registration certificate is issued, you cannot issue revised invoices for subsequent transactions. For corrections to regular invoices: issue credit note (to reduce value/tax) or debit note (to increase value/tax). Amend the original in GSTR-1 of the period in which the credit/debit note is issued.
