How GST works on an Indian invoice
India runs a single nationwide Goods and Services Tax (GST), but the tax is split depending on where the supply goes. The deciding factor is the place of supply compared with your location.
For an intra-state supply (the supplier and the place of supply are in the same state or union territory), the tax is split into two equal halves: Central GST (CGST) and State GST (SGST), or UTGST in a union territory. So an 18 percent rate appears on the invoice as 9 percent CGST plus 9 percent SGST. For an inter-state supply (different states, or an export or import), a single Integrated GST (IGST) is charged at the full rate, for example 18 percent IGST. The total tax is the same either way; only the split and the recipient government differ.
To issue GST tax invoices you must be a registered taxable person with a GSTIN. Registration is generally required once turnover crosses the threshold (commonly Rs 40 lakh for goods or Rs 20 lakh for services, lower in some special-category states), and for certain businesses such as inter-state suppliers and e-commerce operators regardless of turnover.
The GST tax invoice format
A GST tax invoice has a prescribed set of particulars. There is no single official template, but a compliant invoice for a taxable supply must contain the following:
- Supplier name, address and GSTIN
- The legal name, address and the supplier's 15-digit GST Identification Number (GSTIN).
- Consecutive invoice number
- A unique serial number for the financial year, not exceeding sixteen characters, generated consecutively without gaps.
- Date of issue
- The date the tax invoice was issued.
- Recipient details
- The name, address and GSTIN of the buyer if they are registered. For unregistered buyers, the name and delivery address are shown above the prescribed value.
- HSN or SAC code
- The Harmonised System of Nomenclature (HSN) code for goods or the Services Accounting Code (SAC) for services, for each line item.
- Description, quantity and unit
- A description of the goods or services, with quantity and unit of measure for goods.
- Taxable value
- The value of the supply after any discount, on which GST is calculated.
- Tax rate and amount by head
- The rate and amount of tax shown separately as CGST, SGST/UTGST or IGST, and cess where it applies.
- Place of supply
- The place of supply and the state name and code, especially for inter-state supplies.
- Reverse charge note
- A statement of whether tax is payable on a reverse-charge basis, where that applies.
- Signature
- The signature or digital signature of the supplier or an authorised representative.
HSN/SAC codes and place of supply
The HSN code for goods and the SAC code for services classify what you are selling and fix the applicable GST rate. The number of HSN digits you must quote depends on your turnover: smaller taxpayers quote fewer digits, larger ones quote more (commonly four digits up to a turnover threshold and six digits above it, with eight digits for exports and imports). Quoting the right code on every line is what keeps the rate and the return reconciliation correct.
The place of supply is the rule that decides whether the transaction is intra-state (CGST plus SGST) or inter-state (IGST). For goods it is usually where the goods are delivered; for services there are specific rules depending on the type of service and whether the recipient is registered. Getting the place of supply right matters because charging CGST plus SGST when IGST was due (or the reverse) creates a mismatch that your customer cannot easily claim as input tax credit.
The taxable value, the rate, and the CGST/SGST/IGST split should be shown clearly so the recipient can match the invoice to their GST returns. Where the recipient is registered, their GSTIN must appear, because it is the link that lets them claim input tax credit for the GST you charged.
E-invoicing and the bill of supply
E-invoicing is mandatory above a turnover threshold. Businesses whose aggregate turnover crosses the prescribed limit (the threshold has been lowered in stages over the years, reaching Rs 5 crore for many) must report each business-to-business invoice to the government Invoice Registration Portal, which returns an Invoice Reference Number (IRN) and a signed QR code. The IRN and QR code must then be printed on the invoice. An invoice that should have been e-invoiced but was not is treated as invalid, so it is important to check whether your turnover puts you in scope.
Not every supply uses a tax invoice. A composition dealer, who pays GST at a flat composition rate and cannot collect tax from customers, must not issue a tax invoice. Instead they issue a bill of supply, which shows the same identifying details but no tax breakdown, and carries the words "composition taxable person, not eligible to collect tax on supplies". A registered person also issues a bill of supply for exempt or nil-rated goods and services. Other GST documents you may need include a receipt voucher for advances, and credit or debit notes to adjust a previously issued invoice.
Indian invoicing questions
What is the difference between CGST, SGST and IGST?
CGST and SGST apply together to an intra-state supply, where the supplier and the place of supply are in the same state; the rate is split into equal CGST and SGST halves. IGST applies to an inter-state supply, between different states or on imports and exports, and is charged at the full rate as a single tax. The total tax is the same; only the split and which government receives it differ.
What must a GST tax invoice in India include?
A GST tax invoice must show the supplier's name, address and GSTIN, a consecutive invoice number, the date, the recipient's details, the HSN or SAC code, a description with quantity, the taxable value, the tax rate and amount split into CGST and SGST or IGST, the place of supply, any reverse-charge note, and the supplier's signature.
What is an HSN or SAC code on an invoice?
HSN (Harmonised System of Nomenclature) is the classification code for goods, and SAC (Services Accounting Code) is the equivalent for services. Each line item on a GST invoice carries the relevant code, which determines the applicable GST rate. The number of digits you must quote depends on your turnover, with more digits required at higher turnover and for exports and imports.
When is e-invoicing mandatory in India?
E-invoicing is mandatory for businesses whose aggregate turnover crosses the prescribed threshold, which has been lowered in stages over the years. In scope, each business-to-business invoice must be reported to the Invoice Registration Portal, which returns an Invoice Reference Number (IRN) and a QR code that must be printed on the invoice. An invoice that should have been e-invoiced but was not is treated as invalid.
What is a bill of supply and who issues it?
A bill of supply is a document issued instead of a tax invoice when no GST is charged to the customer. Composition dealers, who pay tax at a flat rate and cannot collect it from buyers, issue a bill of supply, as do registered persons supplying exempt or nil-rated goods and services. It shows the same identifying details as an invoice but no tax breakdown.
Do I need a GSTIN to issue invoices in India?
You need a GSTIN to issue a GST tax invoice and to charge GST. Registration is generally required once your turnover crosses the threshold (commonly Rs 40 lakh for goods or Rs 20 lakh for services, lower in some special-category states), and for certain businesses such as inter-state suppliers and e-commerce operators regardless of turnover. Without registration you cannot collect GST or claim input tax credit.