CHAPTER-7 TAX INVOICE,CREDIT AND DEBIT NOTES

INTRODUCTION

Whenever a transaction takes place, different kinds of documents are issued under different circumstances, like invoice, credit note, debit note and bill of supply. Tax invoice acts as a document evidencing the payment of the value of the goods or services or both and also the tax portion in the same. Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017. This section mandates the issuance of an invoice or a bill of supply for every supply of goods or services. A registered person cannot avail input tax credit unless he is in possession of a tax invoice or a debit note. The provisions of relating to tax invoices, debit and credit notes are covered by Section 34 of Chapter VII of CGST Act 2017 read with Rule 46 to Rule 55A of CGST Rules 2017.

Section-31 Tax invoice

(1) A registered person supplying taxable goods shall, before or at the time of,-

• • removal of goods for supply to the recipient, where the supply involves movement of goods; or
  • delivery of goods or making available thereof to the recipient, in any other case,

issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed :

Provided that the Government may, on the recommendations of the Council, by notification, specify the categories of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed .

(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed :

[Provided that the Government may, on the recommendations of the Council, by notification,-

• • specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed
  • subject to the condition mentioned therein, specify the categories of services in respect of which-
    • any other document issued in relation to the supply shall be deemed to be a tax invoice; or
    • tax invoice may not be issued.]^[1]

(3) Notwithstanding anything contained in sub-sections (1) and (2)-

• •  a registered person may, within one month from the date of issuance of certificate of registration and in such manner as may be prescribed , issue a revised invoice against the invoice already issued during the period beginning with the effective date of registration till the date of issuance of certificate of registration to him;
  • a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed ;
  • a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed :

Provided that the registered person may not issue a bill of supply if the value of the goods or  services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed ;

• •  a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed , evidencing receipt of such payment;
  • where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment;
  • a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 [, within the period as may be prescribed,]^[2] shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;
  • a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier.

[Explanation.––For the purposes of clause (f), the expression “supplier who is not registered” shall include the supplier who is registered solely for the purpose of deduction of tax under section 51.]^[3]

(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.

(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,-

• • where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment;
  • where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment;
  • where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.
  • In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.

(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.

Explanation.– For the purposes of this section, the expression “tax invoice” shall include any revised invoice issued by the supplier in respect of a supply made earlier.

References for Amendments:

[1] Substituted for the proviso “Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which—
(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(b) tax invoice may not be issued.” by the Finance Act, 2020 (No. 12 of 2020) brought into force w.e.f. 01st January, 2021.
[2] Inserted vide The Finance (No.2) Act, 2024 (No. 15 of 2024) dated 16.08.2024, to be bought in force w.e.f. 01.11.2024 vide Notification no. 17/2024 -Central Tax, dated 27.09.2024.
[3] Inserted vide The Finance (No.2) Act, 2024 (No. 15 of 2024) dated 16.08.2024, to be bought in force w.e.f. 01.11.2024 vide Notification no. 17/2024 -Central Tax, dated 27.09.2024.

Section-31A Facility of digital payment to recipient

The Government may, on the recommendations of the Council, prescribe a class of registered persons who shall provide prescribed modes of electronic payment to the recipient of supply of goods or services or both made by him and give option to such recipient to make payment accordingly, in such manner and subject to such conditions and restrictions, as may be prescribed.]^[1]

Reference for Amendments:

[1] Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) brought into force w.e.f. 01.01.2020.

Section-32 Prohibition of unauthorized collection of tax

(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act.

(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made thereunder.

Section-33 Amount of tax to be indicated in tax invoice and other documents

Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made.

Section-34 a Credit nd debit notes

(1) [Where one or more tax invoices have]^[1] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient [one or more credit notes for supplies made in a financial year]^[2] containing such particulars as may be prescribed.

(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than [the thirtieth day of November]^[5] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as as may be prescribed:

[Provided that no reduction in output tax liability of the supplier shall be permitted, if the––

• •  input tax credit as is attributable to such a credit note, if availed, has not been reversed by the recipient, where such recipient is a registered person; or
  •  incidence of tax on such supply has been passed on to any other person, in other cases.]^[6]

(3) [Where one or more tax invoices have]^[3] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient [one or more debit notes for supplies made in a financial year]^[4] containing such particulars as may be prescribed.

(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed

.

Explanation.–For the purposes of this Act, the expression “debit note” shall include a supplementary invoice.

References for Amendments:

[1] Substituted for “Where a tax invoice has” by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) brought into force w.e.f. 01.02.2019.
[2] Substituted for “a credit note” by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) brought into force w.e.f. 01.02.2019.
[3] Substituted for “Where a tax invoice has” by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) brought into force w.e.f. 01.02.2019.
[4] Substituted for “a debit note” by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) brought into force w.e.f. 01.02.2019.
[5] Substituted for word “September” vide The Finance Act, 2022 (No. 6 of 2022) dated 30.03.2022, brought into force w.e.f. 01.10.2022 vide Notification No. 18/2022 – Central Tax dated 28.09.2022.
[6] Substituted vide The Finance Act, 2025 (No. 7 of 2025) dated 29.03.2025 brought into force w.e.f. 01.10.2025 notified vide Notification No. 16/2025-Central Tax dated 17.09.2025. Prior to its substitution, it reads as under
“Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.”