What Is a Tax Invoice?
Of all the paperwork GST asks an Indian business for, one document does the heavy lifting.
A tax invoice is the document a GST-registered seller issues on a taxable supply, showing the goods or services, their value, and the tax charged on them. Rule 46 of the CGST Rules sets out exactly what it has to carry, and section 31 of the CGST Act says when it has to be issued.
It is not just a bill. That document is the only thing letting your buyer recover the GST you charged, so a field left blank at your counter becomes a credit your customer cannot claim.
What a Tax Invoice Must Contain Under Rule 46
Rule 46 lists the particulars clause by clause. They fall into these blocks.
| Block | What Rule 46 asks for |
|---|---|
| Supplier | Name, address and GSTIN |
| Number | Consecutive serial number, up to sixteen characters |
| Date | Date of issue |
| Buyer | Name, address and GSTIN or UIN, if registered |
| Goods | HSN code, description, quantity and unit |
| Value | Total value, then taxable value after any discount |
| Tax | Rate and amount of central, State, integrated, Union territory tax or cess |
| Supply | Place of supply with the State name on inter-state sales |
| Charge | Whether tax is payable on reverse charge |
| Sign | Signature or digital signature of the supplier or an authorised representative |
Two of those blocks carry more weight than the rest. Get the buyer’s GSTIN wrong and the credit lands against a stranger; leave the place of supply off an inter-state sale and you may have charged the wrong tax.
Across the retail counters we work with, the invoice that gets queried is almost never wrong on the arithmetic. It is a GSTIN typed a character short, or an HSN column left empty because nobody mapped the item. The clause list itself sits on CBIC’s portal as Rule 46 of the CGST Rules, the version to check when a clause moves.
When You Must Issue a Tax Invoice
Timing is fixed by law, not by when you get to it.
- Goods: before or at the time the goods are removed or delivered to the buyer.
- Services: within thirty days of supplying the service, under Rule 47.
- Small counter sales: where the value is under Rs.200, the buyer is unregistered and does not ask for an invoice, you may skip the individual document and raise a single consolidated one at the close of the day.
One more threshold matters. If your aggregate annual turnover has crossed Rs.5 crore in any year since 2017-18, your business-to-business invoices must be reported to the invoice registration portal and carry a QR code with the invoice reference number. Walk-in consumer sales stay outside it.
Missing the reporting step is the costliest slip. Where e-invoicing applies to you and no invoice reference number is generated, Rule 48(5) means the document is not treated as an invoice at all, so your buyer has nothing to claim against. Ordinary filing slips are less dramatic, and this GST return filing checklist keeps them off.
Difference Between a Tax Invoice and a Bill of Supply
Both are sale documents. Only one moves tax.
| Aspect | Tax invoice | Bill of supply |
|---|---|---|
| Issued by | A regular GST-registered seller | A composition dealer, or a seller of exempt goods |
| Tax shown | Yes, split into CGST, SGST or IGST | None charged |
| Buyer credit | The buyer can claim it | No credit passes |
| Governed by | Rule 46 | Rule 49 |
The practical test is simple: if the supply is taxable it takes a tax invoice, and if it is exempt or you pay at a flat composition rate, it takes a bill of supply.
A seller registered under the composition scheme cannot issue a tax invoice at all, so their customers claim no input tax credit on what they buy.
Our bill of supply entry covers that side.
Tax Invoice Example
Below is an invented invoice from a wholesaler in Okhla, New Delhi, to a registered kirana buyer in the same state, so the tax splits into CGST and SGST.
Note: this is an invented example for illustration only. The traders, both GSTINs, the invoice number and every figure are made up.
Had the buyer been registered in Haryana, the same sale would have carried IGST at 5%, and the place of supply would have had to name the State.
Get Every Tax Invoice Right First Time
For retail businesses, Petpooja Invoice generates invoices that adhere to the latest GST laws, with automatic GST calculation on every invoice and a detailed breakdown of tax components. It also covers e-invoice and e-way bill generation, multi-counter billing and centralised inventory with stock transfer, which is what the best retail billing software looks like for a counter billing all day.
For restaurants, Petpooja POSS is the counter-side equivalent, taking orders, punching bills and generating KOT. The rates that apply on a restaurant bill are a separate question, covered in GST on restaurants.
Before you raise the next one, check the maths with this GST invoice value calculator.
Frequently Asked Questions
Yes. “GST invoice” is the everyday name for the same document; the law calls it a tax invoice in section 31 and Rule 46. Nothing changes on the format.
No. Only a GST-registered person may issue one, because only they can charge GST. An unregistered seller raises an ordinary sale bill with no tax on it, and this guide to GST registration covers crossing over.
The credit will not reach them, because the entry lands against the wrong taxpayer. Amend it in Table 9A of your next GSTR-1, entering the invoice as filed and then the corrected GSTIN. That has to be done by 30 November following the end of that financial year, or the date you file the annual return, whichever is earlier.
Three for goods, marked original for the recipient, duplicate for the transporter and triplicate for the supplier. Services need only two, original for the recipient and duplicate for the supplier.
Only where your aggregate annual turnover has crossed Rs.5 crore in any year since 2017-18, and only on business-to-business supplies. Sales to walk-in consumers are outside the requirement.
