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🧾 Invoicing — GST Reference Notes

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1. GST Documents — Types and Purpose

Every supply of goods or services under GST must be supported by a specified document. The type of document depends on whether the supply is taxable, exempt, or made by a composition dealer.

DocumentIssued ByWhen Used
Tax InvoiceRegistered regular taxpayerTaxable supply of goods or services (B2B or B2C)
Bill of SupplyComposition taxpayer / supplier of exempt goods/servicesNo GST charged — supplies not subject to tax
Delivery ChallanAny taxpayerMovement of goods without sale (job work, branch transfer, exhibition)
Receipt VoucherRegistered taxpayerOn receipt of advance payment before supply
Payment VoucherRecipient under RCMWhen tax is payable by recipient under reverse charge
Refund VoucherSupplierWhen advance is refunded and supply is not made
Credit Note (CDN)SupplierReduce value / GST of an earlier invoice (returns, over-billing)
Debit Note (DBN)SupplierIncrease value / GST of an earlier invoice (under-billing)
2. Mandatory Fields on a Tax Invoice

A tax invoice under Rule 46 of CGST Rules must contain ALL of the following:

FieldRequirement
Invoice numberUnique within FY, max 16 characters (alphanumeric + special chars allowed)
Invoice dateDate of issue
Supplier GSTIN15-character GSTIN
Supplier name and addressAs per registration
Recipient GSTINMandatory for B2B (buyer's GSTIN)
Recipient name, address, stateRequired for B2B; for B2C >₹50,000 inter-state, also mandatory
Place of SupplyState code + state name
HSN/SAC codePer line item (digit requirement depends on turnover)
Description of goods/servicesPer line item
Quantity and unit (UQC)For goods
Taxable valueAfter discount
Tax rateCGST + SGST or IGST rate
Tax amountCGST + SGST or IGST computed on taxable value
Total invoice valueSum of taxable value + all taxes
Signature or digital signatureOf authorised person
3. B2B vs B2C — Key Differences
FeatureB2B (Business to Business)B2C (Business to Consumer)
Buyer has GSTIN?YESNO (unregistered buyer)
Buyer can claim ITC?YESNO
Mandatory GSTIN on invoiceYESNO
Reported in GSTR-1Tile 4A (invoice-wise)Tile 7 (consolidated by state+rate)
B2CL exception—Inter-state > ₹2.5 lakh: invoice-wise in Tile 5A
4. Intra-State vs Inter-State — Tax Applicability
Supply TypeConditionTax ApplicableFormula
Intra-StateSeller and buyer in SAME state / UTCGST + SGSTEach = Rate ÷ 2
Inter-StateSeller and buyer in DIFFERENT statesIGSTFull rate
ImportGoods entering IndiaIGST + Customs Duty—
ExportGoods leaving IndiaZero-rated (IGST 0% or with refund)—
Place of Supply (POS) Rules — Quick Reference
•Goods: POS = place of delivery (where goods are physically received)
•Services (general): POS = location of recipient (if registered); otherwise location of recipient's address
•Immovable property services: POS = location of property
•Restaurant / hotel / catering: POS = location where service is performed
•Passenger transport: POS = place of embarkation
📌 Example
Rajan Enterprises (GSTIN: 29AAAAA1234A1Z5, Karnataka) supplies mobile phones worth ₹1,00,000 (taxable) to Meera Traders (GSTIN: 27BBBBB5678B1Z3, Maharashtra).
Since seller is in Karnataka (29) and buyer is in Maharashtra (27) — this is an INTER-STATE supply.
Tax = IGST @ 12% = ₹12,000
Total invoice value = ₹1,00,000 + ₹12,000 = ₹1,12,000
📌 Example
Same seller supplies ceiling fans worth ₹50,000 (taxable @ 18%) to a Delhi buyer.
IGST @ 18% = ₹9,000. Invoice total = ₹59,000.
Now if the same goods were supplied to a Kerala buyer (same state as seller — Karnataka): No, Karnataka and Kerala are different states. Still inter-state → IGST.
5. HSN and SAC Code Requirements
Annual Turnover (Previous FY)Digits Required on InvoiceIn GSTR-1 HSN Summary
Up to ₹1.5 croreOptional (not mandatory)2-digit (if provided)
₹1.5 crore to ₹5 crore4 digits mandatory4-digit
Above ₹5 crore6 digits mandatory6-digit

HSN = Harmonised System of Nomenclature (for goods). SAC = Services Accounting Code (for services). Both are internationally standardised product classification codes.

6. Time of Supply — When Does Tax Liability Arise?
ScenarioTime of Supply (Goods)Time of Supply (Services)
Normal supplyEarlier of: date of invoice OR date of deliveryEarlier of: date of invoice OR date of payment
Advance receivedDate of advance receipt (proportional)Date of advance receipt
RCM (Reverse Charge)Earlier of: date of receipt OR 30 days from invoiceEarlier of: date of payment OR 60 days from invoice date
7. Credit Notes and Debit Notes
FeatureCredit NoteDebit Note
PurposeReduce an earlier invoice amountIncrease an earlier invoice amount
When issuedGoods returned, over-billing, discount after supplyUnder-billing, additional charges
Effect on taxReduces tax liability of supplierIncreases tax liability of supplier
Effect on buyerReduces ITC of buyerIncreases ITC of buyer
GSTR-1 tileTile 9B (registered) / Tile 9A (unregistered)Same tiles as credit note
Time limit30 Sept of following FY OR date of GSTR-9 filing (whichever is earlier)No statutory limit
ℹ️ Note
A credit note must reference the original invoice number. Without this linkage, the buyer's ITC adjustment in GSTR-2B cannot happen correctly.
❓ Problem
A Delhi supplier (GST rate 18%) issued an invoice for ₹1,00,000 in November. The buyer returns goods worth ₹20,000 in January of the same FY. What document should the supplier issue and what is the GST impact?
✅ Solution
The supplier issues a Credit Note for ₹20,000 taxable value.
Since Delhi is an intra-state supply (assuming buyer is also in Delhi):
CGST = ₹20,000 × 9% = ₹1,800 (reduction)
SGST = ₹20,000 × 9% = ₹1,800 (reduction)
The supplier's output tax liability reduces by ₹3,600. The buyer must reduce their ITC by ₹3,600 in the same period. The credit note is declared in GSTR-1 Tile 9B.
❓ Problem
A service provider charges ₹5,00,000 for a project. After completion, the client requests an additional scope of work worth ₹50,000. GST rate is 18%. What document does the service provider issue?
✅ Solution
The service provider issues a Debit Note for ₹50,000 (taxable value).
IGST (if inter-state) = ₹9,000 OR CGST + SGST = ₹4,500 + ₹4,500 (if intra-state).
The Debit Note references the original invoice, increases the service provider's output tax, and increases the buyer's ITC.
✏️ MCQ Practice — 50 Questions
1.A tax invoice must be issued for which type of supply?
(A) B2C supplies only (B) B2B supplies only (C) All taxable supplies to a registered person (B2B) (D) Only exports
2.A Bill of Supply is issued by:
(A) Regular taxpayers for exempt supplies only (B) Composition dealers and suppliers of exempt goods/services (C) Only e-commerce operators (D) Importers only
3.For intra-state supplies, which taxes appear on an invoice?
(A) IGST only (B) CGST + SGST (C) CGST + IGST (D) SGST + IGST
4.For inter-state supplies, which tax is charged on an invoice?
(A) CGST + SGST (B) IGST only (C) CGST only (D) SGST only
5.A B2C (unregistered buyer) invoice for ₹60,000 intra-state is reported in GSTR-1 under:
(A) Tile 4A — B2B (B) Tile 7 — B2CS (C) Tile 6A — Exports (D) Tile 9B — CDN
6.Which document is issued when goods are returned by the buyer and credit is given?
(A) Tax Invoice (B) Debit Note (C) Credit Note (D) Bill of Supply
7.Which document is issued when additional charges are to be recovered from the buyer?
(A) Tax Invoice (B) Debit Note (C) Credit Note (D) Delivery Challan
8.Time limit for issuing a tax invoice for goods (general case) is:
(A) At the time of removal / delivery (B) 7 days after removal (C) 15 days after removal (D) 30 days after supply
9.Time limit for issuing a tax invoice for services is:
(A) On completion of service (B) 30 days from date of supply (C) 45 days from date of supply (D) 60 days from supply
10.HSN code is mandatory on tax invoices for suppliers with annual turnover above:
(A) ₹40 lakhs (B) ₹1 crore (C) ₹1.5 crore (D) ₹5 crore
11.A supplier with turnover between ₹1.5 crore and ₹5 crore must use how many HSN digits?
(A) 2 digits (B) 4 digits (C) 6 digits (D) 8 digits
12.A supplier with turnover above ₹5 crore must use how many HSN digits?
(A) 4 digits (B) 6 digits (C) 8 digits (D) 10 digits
13.A Credit Note must be issued within which deadline?
(A) 30 days from original invoice (B) September 30th of next FY or date of annual return, whichever is earlier (C) 6 months from invoice date (D) End of the same financial year
14.A Debit Note raised by the supplier is reported in GSTR-1 under:
(A) Tile 4A — B2B invoices (B) Tile 9B — CDN Registered (C) Tile 7 — B2CS (D) Tile 12 — HSN Summary
15.A B2CL invoice applies when an unregistered buyer's inter-state invoice value exceeds:
(A) ₹50,000 (B) ₹1 lakh (C) ₹2.5 lakhs (D) ₹5 lakhs
16.Delivery challan is used for:
(A) Sale of goods (B) Job work, goods on approval, or goods sent on loan — NOT a final supply (C) Import of goods (D) Export of services
17.Which document is issued when advance is received before supply of services?
(A) Tax invoice (B) Debit note (C) Receipt voucher (D) Delivery challan
18.Composite supply is taxed at:
(A) The average rate of all supplies (B) The rate of the principal supply (C) The highest rate among all supplies (D) Zero-rated
19.Mixed supply under GST is taxed at:
(A) The average rate (B) The highest rate among all supplies in the bundle (C) The lowest rate (D) Zero
20.Reverse Charge invoices (self-invoice) are issued by:
(A) The seller (B) The buyer — for unregistered purchases under RCM (C) The government (D) The GST officer
21.Self-invoicing under RCM must be done when purchasing from:
(A) Registered suppliers above ₹5 crore turnover (B) Unregistered suppliers for notified goods/services (C) Any supplier outside the state (D) Only importers
22.Aggregate invoice can be issued for:
(A) A single supply above ₹2.5 lakh (B) Multiple small B2C supplies in a day to multiple buyers (C) Export supplies (D) Exempt supplies only
23.Which return captures B2B invoices issued by the supplier?
(A) GSTR-2A (B) GSTR-2B (C) GSTR-1 (D) GSTR-3B
24.SAC (Service Accounting Code) is used for:
(A) Classifying goods (like HSN) (B) Classifying services — equivalent of HSN for goods (C) Identifying state codes (D) Assigning GSTIN numbers
25.For exports under bond/LUT (without payment of IGST), the invoice shows GST as:
(A) IGST at applicable rate — buyer pays and claims refund (B) Zero — supplier claims refund of ITC (C) Exempt — no GST applicable at all (D) Deferred — paid after goods leave India
26.An invoice once issued with an IRN (e-Invoice) can be edited:
(A) Any time before buyer confirms ITC (B) Only within 24 hours (C) Never — IRN must be cancelled and fresh invoice issued (D) Within 7 days
27.Who issues a debit note in GST?
(A) Buyer — to reduce the amount payable (B) Supplier — to charge additional amount from the buyer (C) GST department (D) Bank on behalf of supplier
28.Tax invoices must be retained for a minimum period of:
(A) 3 years from the due date of annual return (B) 5 years from the due date of annual return (C) 7 years from the due date of annual return (D) Until GST registration is cancelled
29.Export invoices are reported in GSTR-1 under which tile?
(A) 4A — B2B (B) 6A — Exports (C) 7 — B2CS (D) 9B — CDN
30.ITC on capital goods (machinery) is:
(A) Not allowed (B) Allowed — fully claimed in the month of purchase (C) Allowed — spread over 5 years at 20% per year (D) Allowed at 50% in year 1, 50% from year 2
31.Which invoice type in IndIaTaxSim corresponds to supply to a registered person in another state?
(A) B2C (B) B2B inter-state (C) B2CL (D) CDN_REG
32.A composition dealer must issue a Bill of Supply (not a Tax Invoice). The GST on the supply is:
(A) Collected from the buyer separately (B) Absorbed by the composition dealer from their own pocket (C) Not charged — no GST on composition dealer's supplies (D) Charged at 1% uniformly
33.Place of supply for restaurant services is:
(A) Location of restaurant (B) Location of customer (C) State where food is delivered (D) Where booking is made
34.GST on a works contract for building construction is charged at:
(A) 5% (B) 12% (C) 18% (D) 28%
35.Which section of CGST Act defines "supply"?
(A) Section 7 (B) Section 9 (C) Section 12 (D) Section 16
36.An invoice format with serial number, date, supplier GSTIN, buyer GSTIN, HSN, taxable value, tax rate, tax amount is:
(A) Delivery challan (B) Receipt voucher (C) Tax invoice (D) Bill of entry
37.For supply of services between related persons, the value of supply is based on:
(A) Invoice value only (B) Open market value (C) Cost of service (D) Nil — related party supplies are exempt
38.Which invoice type covers a credit note issued by supplier to a registered buyer?
(A) B2B (B) CDN_REG (Credit Note — Registered) (C) CDN_UNREG (D) DBN
39.A debit note (DBN) issued by the supplier appears in the buyer's ITC as:
(A) Reduction in ITC (B) Additional ITC when reflected in GSTR-2B (C) No impact on ITC (D) Eligible for refund
40.The CGST Act provides that for banking and financial services, time of supply is:
(A) Date of invoice or receipt, whichever is earlier (B) Date of payment to the bank (C) Date of debit entry in bank's books (D) Date of RBI notification
41.For B2C supplies where invoice value is ≤ ₹2.5 lakh inter-state, invoices are reported in GSTR-1 under:
(A) Tile 4A — B2B (B) Tile 6A — Exports (C) Tile 7 — B2CS (consolidated) (D) Tile 5 — B2CL
42.Which of the following is NOT a valid GST document type?
(A) Tax Invoice (B) Credit Note (C) Proforma Invoice (D) Bill of Supply
43.ITC on goods purchased for personal use of the promoter is:
(A) Allowed fully (B) Allowed at 50% (C) Blocked under Section 17(5) (D) Allowed if value is below ₹10,000
44.An invoice must show which of the following for inter-state supply?
(A) CGST + SGST amounts (B) IGST amount only (C) Both CGST+SGST and IGST (D) No tax breakdown needed
45.Supplementary invoice in the old VAT regime is now replaced by:
(A) Delivery Challan (B) Debit Note or Credit Note under GST (C) Revised Tax Invoice (D) Bill of Supply
46.GST rate on restaurant services (standalone, non-AC) is:
(A) 0% (B) 5% (no ITC) (C) 12% (with ITC) (D) 18%
47.The place of supply for online services (OIDAR) provided to an unregistered person in India is:
(A) Location of server (B) Location of service provider (C) Location of recipient (India) (D) Location of payment gateway
48.Which invoice type is used in IndIaTaxSim for supply of goods to an SEZ with payment of IGST?
(A) B2B (B) EXP_WPAY (C) CDN_REG (D) B2CL
49.A tax invoice for goods must be issued in how many copies minimum?
(A) 1 (original only) (B) 2 (original + duplicate) (C) 3 (original + duplicate + triplicate) (D) 4 copies
Answer Key
1–C 2–B 3–B 4–B 5–B 6–C 7–B 8–A 9–B 10–C 11–B 12–B 13–B 14–B 15–C 16–B 17–C 18–B 19–B 20–B 21–B 22–B 23–C 24–B 25–B 26–C 27–B 28–C 29–B 30–B 31–B 32–B 33–A 34–B 35–A 36–C 37–B 38–B 39–B 40–C 41–C 42–C 43–C 44–B 45–B 46–B 47–C 48–B 49–C
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