FAQ’s on Tax Invoices
Q 1. When should a Tax Invoice be issued for supply of Goods?
Ans. As per the section 28(1) of the model GST Law, the answer depends upon the type of goods.
- If the goods are such that movement of goods are involved, then taxable invoice has to be issued before or at the time of removal of the goods.
- If supply of goods does not require movement of goods, then taxable invoice has to be issued at the time the goods are delivered to the recipient or when the goods are made available to the recipient.
Q 2. Can there be any relaxation in respect of the time allowed for issuing the invoice?
Ans. If the GST Council recommends that for specified category of goods, or for specific categories of supplies the tax invoice can be issued within a prescribed time, then the Government may issue a notification to implement such recommendation.
Q 3. Do I have to issue an invoice even if I remove goods for ‘sale on approval basis’?
Ans. Yes, invoice has to be issued even if goods are removed for ‘sale on approval basis’ in terms of Section 28(8) of the Revised Model GST Law.
According to Section 28, where the goods (being sent or taken on approval or sale or return or similar terms) are removed before it is known whether a supply will take place, the invoice shall be issued before or at the time when it becomes known that the supply has taken place or six months from the date of removal, whichever is earlier.
Q 4. Will any other document be accepted in lieu of a tax invoice for supply of services?
Ans. As per the proviso of section 28(2) , if the GST Council recommends that for a category of services, any other document should be accepted as a tax invoice, the Government may notify that such document will be deemed to be a tax invoice, subject to conditions and limitations as may be prescribed.
Q 5. I became liable to pay tax on 1st August. I have applied for registration on 15th August, which is within the 30 days window given to me. My registration is granted on 29th August. How will I collect tax for the period from 1st August to 28th August?
Ans. Till the grant of registration on 29th August, tax cannot be collected on a day to day basis against the invoices raised.
Even though the registration is granted on 29th April, the effective date will be 1st April as registration is applied within the permissible 30 days period.
Section 28(3)(a) permits issue of ‘revised tax invoices’ against the invoices raised on a regular basis without collection of tax from 1st April to 28th April. Applicable taxes should be collected in the revised invoices issued.
Q 6. When a ‘Bill of Supply’ is to be issued?
Ans. Bill of supply should be issued by a supplier in the following cases:
- The supply is that of exempted goods or services; or
- The supplier has opted to pay tax under composition scheme.
Q 7. Is it necessary to issue receipt for advances?
Ans. Yes. A receipt voucher or any other document containing prescribed particulars should be issued on receipt of any advance payment towards supply of goods.-section 28(3)( c ).
Q 8 . I am liable to pay tax on Reverse Charge basis for some purchases which are mostly from unregistered persons. What documentation is required in this regard?
Ans. On the supply of notified goods or services by a person who is unregistered, a Purchase ‘invoice’ is to be raised on the date of receipt of goods or services.- section 28(3)(d).
Q 9. What do you mean by Continuous Supply of Goods or Services?
Ans. Under section 2(30), ‘Continuous supply of goods’ means a supply of goods which is provided or agreed to be provided continuously or on recurrent basis. There should be a contract for such supply and the supplier should be invoicing the recipient on a regular or periodic basis. Also, the supply may or may not be through a wire, cable, pipeline or other conduit.
Under section 2(31), ‘Continuous supply of services’ means, supply of service which is provided or agreed to be provided continuously or on recurrent basis. There should be a contract for a period exceeding 3 months. There should be periodic payment obligations.
Q 10. I have a contract to supply manpower to a factory for 12 months. When shall I raise the invoice?
Ans. The contract is for continuous supply of services. If the due date of payment is ascertainable from the contract, then the invoice has to be raised within 30 days of the recipient becoming liable to make the payment even though payment is not received.
Q 11. I am constructing a building for my client. The client is required to pay me on completion of plinth, 1st floor and 2nd floor. When should the invoice be raised?
Ans. Invoice has to be raised within 30 days of completion of each stage.
The document issued by ISD for distribution of credit is deemed to be a ‘tax invoice’, thereby making provisions pertaining to tax invoice, credit notes and debit notes applicable to an ISD, to the extent applicable.
Q 12. Can an Unregistered person issue a tax invoice?
Ans. No, only a registered taxable person can issue tax invoice. Also, section 29 specifically prohibits collection of tax by a person who is not a registered taxable person.
Q 13. What are the circumstances in which a Credit Note is to be issued?
Ans. As per section 31(1), for issuing a Credit note, an invoice for a supply should have been issued earlier and subsequently the following situations should arise:
- The taxable value on which the tax is collected is more than the actual taxable value.
- The tax charged is more than what you should have charged.
- The recipient has returned the goods.
- The recipient has found that the services supplied by you are deficient.
Q 14. Whether the Debit note can be issued for increasing the tax liability by the supplier?
Ans. Yes. ‘Debit notes’ are akin to ‘supplementary invoices’. They are issued by the supplier for recording increase in taxable value or tax charged in the supply.