Avoid Penalties: Essential Components of a GST Invoice

Feb 6, 2023

Introduction to GST invoices

The e-invoicing system has been in existence for around two years, and GST has been in effect in India for five years. Since then, numerous changes have occurred. Electronic invoicing has fundamentally altered the way firms operate, while also unifying all indirect taxes and laying the framework for future technological advancements. Both upgrades have been extremely beneficial and have led to a change in corporate behaviour in India.

You must issue electronic invoices for business-to-business transactions if your company is GST-registered. The government of India declared the fifth phase of mandatory implementation of E-invoicing for businesses with an annual turnover exceeding Rs. 10 Crore from 1st October 2022. The sixth phase for businesses with an annual turnover exceeding Rs. 5 Crore which was set to be implemented from 1st January 2023 to be is yet to be notified.

What is a GST Invoice?

A GST invoice, or a Good and Services Tax invoice, is a document that is issued by a supplier of goods or services to a recipient when the goods or services are sold or provided. The invoice contains details of the transaction, including the value of the goods or services, the GST rate applicable, and the GST amount charged. The invoice is used to record the transaction for the purpose of tax compliance and assessment.

In India, GST is a consumption-based tax that is levied on the sale of goods and services. Under this, businesses registered, are required to issue GST invoices for all taxable supplies of goods and services. This invoice must contain all the required information, as per GST laws and regulations, including the name and GSTIN of the supplier and recipient, the HSN code and description of the goods or services, the taxable value and GST amount, and the signature or digital signature of the supplier or authorized representative.

GST invoices are important for businesses as they are used to claim an input tax credit (ITC) on GST paid on inputs and input services. Additionally, these invoices also help in maintaining transparency and aid in tracking the flow of goods and services, and in the assessment and collection of taxes.

Components of a GST invoice

A GST invoice must include the following components:

  • Name, address, and GSTIN of the supplier: The supplier is the person or entity issuing the invoice. The name, address, and GSTIN (Goods and Services Tax Identification Number) of the supplier must be clearly mentioned on the invoice. The GSTIN is a unique 15-digit number issued by the government to businesses registered under GST.

  • Invoice number and date: An invoice number is a unique number assigned by the supplier to identify the invoice. The date on which the invoice is issued must also be mentioned. It is important to maintain a proper invoicing system to avoid any discrepancies or confusion.

  • Name, address, and GSTIN/UIN of the recipient (if registered): The recipient is the person or entity receiving the goods or services. If the recipient is registered, their name, address, and GSTIN/UIN (Unique Identification Number) must be mentioned on the invoice.

  • HSN code and description of the goods or services: HSN code stands for Harmonized System of Nomenclature code, it is a standardized system for classifying goods. The HSN code and a detailed description of the goods or services must be included in the invoice. This is important for the purpose of tax assessment and compliance.

  • Quantity and rate of the goods or services: The quantity and rate of the goods or services being supplied must be clearly mentioned on the invoice. This is important for calculating the taxable value of goods or services.

  • Taxable value and applicable GST rate: The taxable value is the value of the goods or services on which GST is calculated. The applicable GST rate, which can be CGST, SGST/UTGST or IGST  must be mentioned on the invoice.

  • Total invoice value: The total invoice value, which is the sum of the taxable value and GST, must be mentioned on the invoice. This is the total amount that the recipient must pay for the goods or services.

  • Signature or digital signature of the supplier or authorized representative: The invoice must be signed or digitally signed by the supplier or an authorized representative of the supplier. This is to confirm the authenticity of the invoice and the accuracy of the information provided.

In summary, the goods and services tax invoice must include all the above-mentioned components, and it is important to ensure that all the required information is included in the invoice to avoid any issues with compliance.

Tips for preparing & issuing a GST invoice

It is the taxpayer's or the company's responsibility to create the invoice(s) and submit it to the Invoice Registration Portal (IRP) for authorization. The portal will send the invoice back to the provider after apt confirmation along with a special reference number, a digital signature, and a QR code. 

Step 1: Create an invoice

The seller or supplier will use his or her accounting software to create an invoice in the required format (e-invoice schema). It must provide the necessary information.

Each B2B invoice will be produced by the supplier's accounting software as a JSON file. The JSON file will be added to the IRP.

Step 2: Creation of IRN

The seller would then use a typical hash-generation procedure to generate a unique Invoice Reference Number (IRN).

Step 3: Uploading the invoice

Now, either directly or through third-party software, the seller will upload JSON for each of the invoices as well as IRN to the Invoice Registration Portal.

Step 4: Verification and Signature

If the provider hasn't previously uploaded an IRN, IRP will produce one or check the hash/IRN attached with JSON. Then, it will check the file's authenticity against the GST central registry. It will add a QR code to JSON and its signature to the invoice following successful verification. The previously created hash will serve as the new IRN for the E-invoice. For the duration of the financial year, it will serve as the specific identification of that electronic invoice.

Step 5: Data Sharing

The E-way bill and GST systems will both have access to the uploaded data.

Step 6: Downloading the E-invoice

The seller will receive a return message from the portal that includes the digitally signed JSON, IRN, and QR code. 

Penalties for errors or discrepancies in GST invoices

Errors or discrepancies in GST invoices can result in penalties for the business issuing the invoice. These penalties can include fines, additional taxes, and even criminal charges in some cases. The specific penalties will vary depending on the nature of the error or discrepancy, and the laws of the jurisdiction in which the business is located. In general, it is important for businesses to ensure that their invoices are accurate and comply with all applicable laws and regulations to avoid GST penalty consequences.


The government can impose fines on businesses for errors or violence in GST invoices. The amount of the fine will depend on the severity of the error and the laws of the jurisdiction in which the business is located.

Additional taxes

Businesses may be required to pay additional taxes if they have made errors or discrepancies on their GST invoices. This can include paying the correct amount as well as any penalties or interest that may be assessed.

Interest on tax liability

Businesses may also be charged interest on any tax liability resulting from violations of invoices. The interest rate and the period for which it is charged will depend on the laws of the jurisdiction in which the business is located.

Criminal charges

In some cases, errors or discrepancies in GST invoices may be considered criminal offences, such as GST fraud or wilful misstatement. These types of offences can result in prosecution and imprisonment.

Disqualification from the composition scheme

In case of non-compliance with the rules and regulations under GST, a registered person under the composition scheme may be disqualified from continuing to pay taxes under the composition scheme.

Disallowance of Input tax credit

If the GST invoice is found to be incorrect or not in compliance with the GST laws, the input tax credit claimed on such invoices can be disallowed.

Revocation of registration

In case of non-compliance with GST laws, the registration of the business can be revoked which will make it difficult for the business to operate.

Prosecution and imprisonment

In case of fraud or wilful misstatement in GST invoices, the business or the person responsible can be prosecuted and may face imprisonment.

It's important to note that these penalties are in place to ensure compliance with the Goods and Services Tax laws and regulations and to prevent tax fraud. Businesses should make sure to accurately record and report transactions to avoid errors and discrepancies and any penalties that may result from them.

Conclusion: The importance of accurate & compliant GST invoicing

In conclusion, GST invoicing is an important aspect of tax compliance for businesses registered under GST. Accurate and compliant GST invoicing is essential for maintaining transparency in the flow of goods and services, and for the assessment and collection of taxes.

Businesses must ensure that all the required information is included in the GST invoice and that the invoice is compliant with the laws and regulations. Failing to issue accurate and compliant invoices can lead to penalties and fines, and can also result in disputes with the tax authorities. Therefore, it is crucial for businesses to understand and adhere to the laws and regulations related to invoicing to avoid any compliance-related issues.

GenieBooks 100% Cloud-based accounting and inventory management software is fully GST compliant and ensures total compliance in all invoicing and accounting documentation at a professional level and saves you from any financial repercussions.