Library / Goods and Services Tax: The Professional's Master Guide

21. Tax Invoice, Credit and Debit Notes (Sections 31 to 34)

The invoice is the base document of GST: the supplier's liability, the recipient's credit and the officer's audit all start from it. Section 31 says when it is issued, rules 46 to 55 what it contains, and section 34 governs credit and debit notes.

21.1 Contents of a tax invoice (rule 46)

The table below is a specimen layout under rule 46 for checking a client's invoice format.

Part of invoice	Particulars required
Header	Name, address and GSTIN of supplier; the words "Tax Invoice"
Serial number and date	Consecutive number, up to 16 characters, unique for the financial year (letters, numerals, hyphen and slash allowed); date of issue
Recipient	Name, address and GSTIN or UIN if registered; for unregistered recipient, name, address and delivery address with State name and code where value is Rs. 50,000 or more
Line items	HSN code (goods) or SAC (services), description, quantity and unit, total value, taxable value after discount
Tax	Rate and amount of CGST, SGST or UTGST, IGST and cess shown separately
Place of supply	State name and code, for inter-State supplies
Other	Delivery address if different; whether tax is payable on reverse charge; signature or digital signature (not needed for e-invoices)

HSN digits. Taxpayers with aggregate turnover up to Rs. 5 crore in the previous year must show at least 4-digit HSN on B2B invoices (optional on B2C). Taxpayers above Rs. 5 crore must show 6 digits on all invoices. Supplies below Rs. 200 to an unregistered person may be covered by a consolidated invoice at day end.

Copies. Goods invoices are in triplicate (recipient, transporter, supplier); services in duplicate.

21.2 Time limit for issue

Situation	Invoice to be issued
Goods involving movement	Before or at the time of removal (section 31(1)(a))
Other goods	Before or at the time of delivery or making available
Services	Within 30 days of supply (rule 47); banks, insurers and NBFCs within 45 days
Continuous supply of goods	Before or at the time of each statement or payment (section 31(4))
Continuous supply of services	On or before the due date of payment; if not ascertainable, at receipt of payment; if linked to an event, on or before its completion (section 31(5))
Goods sent on approval	When supply is accepted or 6 months from removal, whichever is earlier (section 31(7))
RCM from unregistered supplier	Self-invoice within 30 days of receipt of supply (section 31(3)(f), rule 47A)

Illustration 124: Last date for a service invoice

Mehta and Co., chartered accountants, complete a stock audit on 5 May 2026; an NBFC completes a service the same day.

Step 1: Mehta and Co. must invoice by 4 June 2026 (30 days); the NBFC by 19 June 2026 (45 days).

Result: If Mehta and Co. invoices on 20 June 2026, the time of supply stays 5 May 2026 (date of provision), and tax paid in the June return carries interest.

21.3 Other documents: bill of supply, vouchers and challans

Bill of supply (rule 49): issued instead of a tax invoice for exempt supplies and by composition taxpayers. No tax is shown. A composition taxpayer must write "composition taxable person, not eligible to collect tax on supplies" on it.
Receipt voucher (rule 50): issued on receipt of an advance for services. If the rate is not known, 18% applies; if the nature is not known, it is treated as inter-State. Advances for goods are not taxed.
Refund voucher (rule 51): issued when an advance is returned and no supply is made. It supports reduction of the tax paid on the advance.
Payment voucher (rule 52): issued by a recipient paying tax under reverse charge, at the time of payment to the supplier.
Revised tax invoice (rule 53): issued within one month of grant of registration for supplies made between the effective date of registration and the date of the certificate (section 31(3)(a)).
ISD invoice (rule 54): issued by an Input Service Distributor to distribute credit, including tax paid under reverse charge after the Finance Act, 2025.
Delivery challan (rule 55): used where goods move without a supply or before the invoice: job work, liquid gas where quantity is not known at removal, goods sent for exhibition, goods in completely or semi knocked down condition sent in lots, and transport for reasons other than supply.

Illustration 125: Advance for services and refund voucher

Sharma Textiles Pvt. Ltd., Ahmedabad, receives Rs. 1,18,000 on 12 June 2026 as advance for a design service taxable at 18%, from a buyer in Ahmedabad.

Step 1: Tax in the advance = Rs. 1,18,000 x 18 / 118 = Rs. 18,000. Value = Rs. 1,00,000.

Step 2: Receipt voucher issued; CGST Rs. 9,000 and SGST Rs. 9,000 paid in the June 2026 return.

Step 3: The contract is cancelled in August 2026 and the advance returned. A refund voucher is issued and Rs. 18,000 adjusted against output tax.

Illustration 126: Self-invoice and payment voucher under reverse charge

Sharma Textiles receives legal services from an individual advocate, who is unregistered, for a fee of Rs. 50,000. The service is received on 3 July 2026 and paid on 28 July 2026.

Step 1: Legal services by an advocate to a business entity are under reverse charge (section 9(3)). As the supplier is unregistered, Sharma Textiles issues a self-invoice within 30 days of receipt, that is by 2 August 2026.

Step 2: On 28 July 2026 it issues a payment voucher.

Step 3: Tax = CGST 9% Rs. 4,500 + SGST 9% Rs. 4,500 = Rs. 9,000, paid in cash in the July 2026 GSTR-3B.

Step 4: The same Rs. 9,000 is taken as ITC in that return, being used for business.

21.4 Credit notes and debit notes (section 34)

A credit note is issued where value or tax in an invoice is excessive, goods are returned or services are deficient; a debit note where value or tax is short. Both are reported in GSTR-1.

Time limit. A credit note for a supply in a financial year must be declared not later than 30 November following the end of that year, or the date of filing the annual return, whichever is earlier (section 34(2), as amended by the Finance Act, 2022). There is no time limit for issuing a debit note; for the recipient, ITC on a debit note is governed by the date of the debit note under section 16(4).

Recipient must reverse. After the Finance Act, 2025, the supplier can reduce his output tax on a credit note only if the recipient has reversed the corresponding ITC. This works through IMS: the recipient accepts the credit note and declares the ITC reversed, and the supplier's liability falls to that extent.

Financial versus GST credit notes. A post-sale discount that was not agreed before or at the time of supply and linked to specific invoices cannot reduce the value under section 15(3)(b) as it stands today. The supplier may issue a financial (commercial) credit note without GST: his tax liability stays as it is and the recipient keeps his full credit. The Finance Act, 2026 amendments that would remove the prior-agreement condition were not notified as on 28 September 2026.

Illustration 127: Sales return and the credit note time limit

Patel Pumps, Rajkot, sold industrial pumps to a dealer in Indore on 15 January 2026 for Rs. 5,00,000 plus IGST Rs. 90,000. On 5 October 2026 the dealer returns 20% of the pumps. Patel Pumps files GSTR-9 for FY 2025-26 on 20 November 2026.

Step 1: Value returned = 20% of Rs. 5,00,000 = Rs. 1,00,000; IGST = Rs. 18,000.

Step 2: Last date to declare the credit note = earlier of 30 November 2026 and 20 November 2026 = 20 November 2026.

Result: A credit note issued on 10 October 2026 and declared in GSTR-1 for October 2026 (filed by 11 November 2026), accepted on IMS with reversal of Rs. 18,000, reduces output IGST by Rs. 18,000. A credit note that cannot be declared by 20 November 2026 can only be a financial credit note.

Key point

Credit notes issued at year-end for volume discounts are the usual problem. If the discount scheme was not agreed in advance and linked to invoices, a GST credit note is not valid, and the supplier's reduction of output tax will be reversed in audit with interest. Keep the dealer agreement or scheme circular, dated before the supplies, on file.

Chapter summary

• Rule 46 lists invoice contents: GSTIN, 16-character serial number, HSN (4 digits up to Rs. 5 crore turnover, 6 digits above), taxable value, tax by head, place of supply and reverse charge flag.

• Goods invoices are issued at removal or delivery; services within 30 days (45 days for banks, insurers and NBFCs).

• Bill of supply for exempt and composition supplies; receipt, refund and payment vouchers for advances and RCM; self-invoice within 30 days for RCM from unregistered suppliers.

• Credit notes must be declared by 30 November after the year end or the annual return date, whichever is earlier; the supplier reduces tax only if the recipient reverses ITC.

• Discounts not agreed in advance go through financial credit notes without tax adjustment.