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GST Invoice

GST Invoice - All about GST Invoices

All about GST Invoice

If you do business in India, you routinely issue invoices to your customers. If you’re registered under or fall in the GST tax slab, you need to know about the applicable GST invoice rules. Read on to know more. 

What is GST?

The Goods and Services Tax (GST) is a comprehensive indirect tax structure that has replaced a number of erstwhile indirect taxes such as VAT, CST, Excise Duty, and so on. GST came into effect from 1st of July, 2017. This destination based, multi-stage tax is levied on every value addition in the supply of goods and services. This implies that GST is levied on every sale point.

GST is applicable on a pan India basis. In the case of an intrastate sale, central GST (CGST) and state GST (SGST) are charged. In the case of an interstate sale, integrated GST (IGST) is charged along with CGST.

GST Invoice

For absolute clarity on business transactions, GST demands a heavy-duty reporting structure that records details until the last mile. A consistent invoice-based reporting system has thus been established, which records every piece of information related to the movement of goods from the origin to the destination.

An important point of compliance in the GST regime is issuing and receiving a GST compliant invoice. Every business registered under the GST regime must provide a bill or invoice to clients for the sale of goods or services. This invoice must be in a GST compliant format to mark a legal sale of goods and services.

A GST invoice contains the relevant details of a business transaction and the parties involved. It has to state the product name, description, terms of sale, the rate charged, discounts, etc. Under GST, the various types of invoices and supporting documents are:

  • Sales invoices

  • Purchase invoices

  • Delivery challans

  • Bill of supply

  • Credit notes

  • Debit notes

  • Refund vouchers

  • Advance receipts

 Importance of invoice in GST

When it comes to GST related documentation, the invoice plays a crucial and indispensable role. The GST invoice issued by a supplier notifies the purchaser of the obligation to pay a certain sum of money for a particular transaction. In essence, the amount mentioned in the GST invoice determines how much GST will actually be charged. This is why it is of such importance in the administration of GST. This logic is supported by Rule 1 of the GST Invoice Rules. These rules clearly consider the invoice to be the foremost piece of evidence for:

  • Supporting a GST registered supplier’s claim for input tax credit incurred

  • Triggering the supply time because it is the invoice date which determines when the GST should be charged

Important fields in GST

Every GST invoice must clearly show the following details:

  • Invoice date and serial number

  • Name of customer

  • Billing and shipping address of goods/services

  • GSTIN of the customer (if they are registered)

  • Supply location

  • Details of sale – Description and quantity in number/unit/meters/kilograms

  • The total value of the sale

  • The taxable value of the sale along with any discounts allowed

  • Rate of CGST/IGST/SGST along with the final amount 

  • SAC code/HSN code

  • Reverse charge basis for GST (if applicable)

  • Supplier’s signature

Here, it is important to note that if the invoice value exceeds Rs. 50,000 but the recipient is not registered, the invoice must have these additional details:

  • The name and address of the recipient

  • Delivery address

  • Name of the state along with state code

How to make error-free GST invoices

Here are the steps which ensure the creation of a fully compliant GST invoice.

  1. Create the invoice and mention the branch of the business (if any) from where the GSTbill will be issued

  2. Fill in the date of the invoice along with the due date of receiving payment. If both these dates are the same, the date of the invoice will be considered the date of payment as well

  3. Fill in the customer details

  4. Enter the correct place of supply to ascertain the kind of tax the sale attracts, whether IGST or SGST and CGST. If the supply destination is not known, the sale is to be treated as an intrastate sale

  5. Enter the details of the goods and services supplied. These include their description, rate, quantity and discounts allowed if any

  6. Put in any additional pertinent information such as whether reverse charge mechanism is applicable or whether the supply is to a Special Economic Zone (SEZ)

Despite paying close attention to detail, there still remains room for human error. To completely eliminate this, businesses must invest in reliable GST invoice software to produce error-free and timely invoices.

Importance of GST invoice software

Choosing an appropriate GST invoice software can really reduce the amount of time spent on creating and maintaining GST compliant invoices and calculating the amount of GST to be paid. Choose an excellent free GST Invoice Software such as EZO to streamline GST billing and eliminate errors.

A free and robust tool like Ezo is particularly useful for small businesses that don’t have the resources to hire an army of accountants or invest in expensive software. With Ezo, you can draft, deliver, send, and track your GST invoices through various channels and automate the invoicing process.

Still asking yourself “what is GST"? LegalDocs is here to answer all your queries. Visit LegalDocs today to find all GST related information and get expert consultation.

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