If you run a business in India and are registered under GST, you are legally required to issue a GST invoice every time you make a taxable sale. But what exactly is a GST invoice, what must it contain, and who actually needs to issue one? This guide covers everything in plain language.
What is a GST Invoice?
A GST invoice is an official document issued by a GST-registered seller to a buyer when goods or services are sold. It serves three purposes: it is the seller's record of the sale, the buyer's proof of purchase, and the document that allows the buyer to claim Input Tax Credit (ITC) on the GST paid.
Without a valid GST invoice, a buyer cannot claim ITC — which means your clients have a strong reason to ask you for one. Issuing a correct invoice is therefore not just a legal obligation, it is good business practice.
Who needs to issue a GST invoice?
Any business or individual that is registered under GST must issue an invoice for every taxable sale of goods or services. This includes:
- Businesses with annual turnover above ₹40 lakh (₹20 lakh for services, ₹10 lakh in special category states)
- Freelancers and consultants registered under GST
- E-commerce sellers
- Traders and shopkeepers registered under GST
- Anyone who has voluntarily registered for GST even below the threshold
Tax Invoice vs Bill of Supply
There are two types of documents under GST. Which one you issue depends on whether you are charging GST on the transaction:
| Document | When to use | GST charged? |
|---|---|---|
| Tax Invoice | Standard taxable sale of goods or services | Yes — CGST+SGST or IGST |
| Bill of Supply | Exempt goods/services, or composition scheme dealers | No |
Most businesses will issue Tax Invoices for the majority of their sales. Bill of Supply is used in specific situations — for example, if you sell items that are GST-exempt (like fresh vegetables), or if you are enrolled in the Composition Scheme.
Mandatory fields on a GST Invoice
The GST law (CGST Rules 2017, Rule 46) specifies exactly what a Tax Invoice must contain. Missing even one required field can make the invoice invalid for ITC purposes.
- Name, address and GSTIN of the supplier
- A consecutive serial number (invoice number) — unique within a financial year
- Date of issue
- Name, address and GSTIN of the recipient (if registered)
- HSN code (for goods) or SAC code (for services)
- Description of goods or services
- Quantity and unit of measurement
- Total taxable value after discount, if any
- Applicable GST rate — CGST, SGST or IGST
- Amount of tax charged — shown separately for CGST, SGST and IGST
- Place of supply (state name and code)
- Whether tax is payable on reverse charge basis
- Signature or digital signature of the supplier
CGST, SGST or IGST — which applies?
This depends on whether the sale is within the same state (intrastate) or across state borders (interstate):
- Intrastate sale (seller and buyer in same state) — charge CGST + SGST, each at half the GST rate. For an 18% item, that is 9% CGST and 9% SGST.
- Interstate sale (seller and buyer in different states) — charge IGST at the full GST rate. For an 18% item, that is 18% IGST.
When must you issue the invoice?
GST law sets strict deadlines for issuing invoices:
- Supply of goods: Before or at the time of delivery, or removal of goods
- Supply of services: Within 30 days of the date of supply
- Banks and financial institutions: Within 45 days
Issuing an invoice late is a violation and can attract penalties under GST law.
HSN and SAC codes
Every item on a GST invoice must have an HSN code (Harmonised System of Nomenclature, used for goods) or SAC code (Services Accounting Code, used for services). These are internationally standardised product classification codes.
How many digits you need depends on your annual turnover:
- Up to ₹5 crore — 4-digit HSN code
- Above ₹5 crore — 6-digit HSN code
- Exporters — 8-digit HSN code
BazaarSathi has a built-in HSN/SAC autocomplete with the most commonly used codes to help you find the right one quickly.
Quick summary
A GST invoice is a mandatory document for every GST-registered business. It must include specific fields set by law, show the correct tax split based on the place of supply, and be issued within the time limit. Using a tool like BazaarSathi ensures the format is correct and all required fields are present.