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Tax Invoice

Meaning

A Tax Invoice is a legal document issued by a registered supplier to the recipient of goods or services, containing details of the transaction, including tax charged. It serves as proof of supply and enables the recipient to claim input tax credit under the Goods and Services Tax (GST) system.

Importance

The tax invoice plays a crucial role in the GST framework due to the following reasons:

Time of Issue

The time limit for issuing a tax invoice under GST varies depending on whether it relates to goods or services:

For Goods:

  • Normal Supply: The invoice must be issued before or at the time of removal of goods for supply.
  • Continuous Supply: The invoice must be issued on or before the due date mentioned in the agreement.

For Services:

  • Normal Supply: The invoice must be issued within 30 days from the date of service completion.
  • Banks & NBFCs: Allowed 45 days to issue an invoice from the date of service.

Contents of a Tax Invoice

A GST-compliant tax invoice must contain the following details:

  1. Name, Address, and GSTIN of the supplier.
  2. Invoice Number (A consecutive serial number unique for each financial year).
  3. Date of Issue of the invoice.
  4. Recipient’s Name, Address, and GSTIN (if registered).
  5. Description of Goods or Services supplied.
  6. Quantity & Unit (for goods).
  7. Value of Supply before tax.
  8. Rate and Amount of GST (CGST, SGST, IGST, UTGST, and cess if applicable).
  9. Total Invoice Amount (Including tax).
  10. Place of Supply (State/Union Territory for inter-state transactions).
  11. Reverse Charge Indicator (if applicable).
  12. Signature or Digital Signature of the supplier or an authorized representative.

HSN (Harmonized System of Nomenclature)

The HSN (Harmonized System of Nomenclature) Code is used to classify goods systematically under GST. It is a globally accepted system for product categorization.

Applicability of HSN Codes in GST:

  • Businesses with Turnover < ₹5 Crore: Need to mention 4-digit HSN code (optional for B2C invoices).
  • Businesses with Turnover ≥ ₹5 Crore: Required to mention 6-digit HSN code for all invoices.
  • Exports and Imports: Must comply with international 8-digit HSN codes.

HSN codes ensure uniformity in classification and help in accurate taxation and compliance.

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