What Are Different Types of Invoices.pdf
- 1. What are invoices? A paper requesting payment is sent with a service or product by the supplier to the buyer. The document in question includes a cost summary for the good or service, in addition to other pertinent details including the item description, cost, buyer and seller names and addresses, and terms of payment. In the unlikely circumstance that there is a disagreement over the payment, it can also be used as legal documentation. It is a record that attests to the contract among the buyer and seller regarding the terms of payment and the invoice's asking price. More details @ Scanning original copies of paper invoices in Virginia . Types of invoices Standard invoice: The most common kind of invoice is called a standard or final invoice, and each industry has a different format for them. Both tiny unregistered firms and registered forms use it. The reason it's called the final invoice is that it's often sent forth after the completion of all work or the delivery of goods. It includes the most essential details, including the invoice number and date, the product description and size, the rate applied, the amount owed, the deadline for payment, and the available payment methods. For the purpose of verifying that the work is completed and to request payment, the seller provides the customer with the standard or final invoice. It is essential to prepare final invoices well in advance and send them out as soon as the work or delivery is completed to ensure that the payment is made as quickly as possible. Tax invoice: The GST system requires that the buyer have a tax invoice that they can use to claim the input tax credit. A tax invoice is issued by sellers who are GST registered and is issued for the taxable supplies. The tax invoice format should have all the details required to be valid as proof for GST buyers to claim their taxes. It is vital to issue tax invoices promptly to avoid delays in filing taxes and the resulting penalties. The most critical information on a GST invoice is the invoice date, invoice number, seller's name, address, GSTIN, buyer’s name, address and GSTIN, name, description, and price of goods sold with HSN code, the tax rate, and the tax amount for each of the goods sold. A competent authority within the company should physically or digitally sign the tax invoice for it to be valid. e-Invoice: The e-Invoice or electronic invoice is a GST-compliant invoice verified by the GST Network (GSTN). All notified Business Accountants are mandated to generate e-invoice. . The e-Invoice system was introduced on 1st October 2020. In the e-invoice system, the invoice details are sent to the GSTN system which verifies and validates and authenticates it with a unique Invoice Reference Number (IRN) and signed QR code through the Invoice Registration Portal (IRP). So the e-Invoice is an electronically validated invoice that is validated by the
- 2. government authority. It is essential for taxation and the failure of a company to create this invoice on time attracts penalties similar to the GST invoice. Proforma invoice: A proforma invoice is a provisional invoice that is sent to the client before the work is completed. It is not a demand for payment but instead is a document that lets the customer know what they will be liable to pay when the service or product is completely delivered. Usually, a proforma invoice estimates the work you will do and how much items will cost and represents a commitment to provide something. The terms in a proforma invoice can change as the project proceeds. Commercial invoice: International trade across country borders requires an invoice for the calculation of the customs and other applicable levies. The commercial invoice acts as a customs declaration for any product that has been sold globally. It should clearly state the details of the buyer, seller, shipment item name and description, quantity, packaging, and value. Timesheet invoice: Some services such as that of law firms, doctors, consultants, and other service providers are billed by the time that is spent. Products that are hired by the customer for a certain time are also billed accordingly. A timesheet invoice is one of the types of invoice that details the time that is being billed and the rate for it in addition to the other invoice details, seller details, and buyer details. The product section details the hours billed and the rate and taxes applicable. Debit notes: A debit note is also called a debit invoice or debit memo. It is used when there is an addition to the amount of a previously issued invoice. It is meant to revise the value of the invoice and indicate the upward revision of the amount that is owed to the seller. So, if a seller has issued an invoice for Rs9,000 but realizes that the amount should have been Rs10,000, a debit note for Rs1,000 is raised. A debit note is always an upward revision and not a downward correction. They are most often issued when there has been an error in the first invoice that was issued. The buyer can also issue them to return defective goods or for any purchase returns. A debit note is essential as proof for tax purposes and in the case of any issue that arises later. Credit notes: Credit notes are also called credit invoices or credit memos. They are used to alter a previously issued invoice in a downward correction of value. There may be a need for a downward revision if there were any returns from the customer or any discount given after the sale. The credit note is proof of the lowered invoice value for taxes and in the case of any dispute in the future. Bill of supply: A bill of supply is an invoice that is issued for non-taxable or exempt transactions under the GST law. It is similar to the tax invoice, except it does not have any tax rates or calculations. This invoice cannot be used for tax purposes as there is no applicable tax due for the items. Receipt voucher: A receipt voucher is also known as a retainer voucher, as it is used when the seller receives an advance payment for the sale. This voucher is issued as the GST norms
- 3. require that the GST be calculated for the advance amount and deposited with the authorities. The voucher is also proof of the received payment. Refund voucher: In the case of an advance payment that was received for an order that was later canceled, a refund is issued with a refund voucher. This invoice is necessary as per the GST norms in addition to the payment voucher and/or receipt voucher. It proves the refund of the amount so that there is no tax chargeable.Continue reading for additional details on Tax advisory . Input service distributor invoice: GST law allows for an input service distributor (ISD) to distribute the input tax credit (ITC) for input services between the company’s different branches. The ISD raises an invoice for each of the units and lists the purchase and ITC allotted to them. Delivery note/delivery challan: The delivery note is also called the goods receipt note or dispatch note. When the seller makes a shipment to a customer, a delivery note is issued when the shipment gets delivered. This is the proof of the delivery to the customer’s address. In the case of any damage to the shipment or the goods, the person who collects the delivery can make a note of it on the delivery note. This will start the process of issuing a credit note to the seller. GST law mandates that there be three copies of the delivery note; one for the seller’s records, one for the customer, and the third for the shipping agency or transporter. e-Way bill: The e-way bill is the electronic waybill generated by GST registered sellers, buyers, or transporter on the GST portal. It is carried by the transporter who is moving a consignment of goods from one place to another after satisfying the prerequisite conditions.