Since the rollout of the Goods and Services Tax (GST) in 2017, the invoicing landscape in India has transformed. It is no longer just a request for payment; it is a critical compliance document. A single error on a GST invoice can lead to denied Input Tax Credit (ITC) for your client, penalties for you, and a nightmare during audits.

For Indian businesses, compliance isn't optional. Whether you are a freelancer in Bangalore or a manufacturer in Gujarat, understanding the mandatory GST invoice format is essential for survival.

This guide covers everything you need to know to create 100% compliant GST invoices, avoid penalties, and keep your business running smoothly.

What Is GST Invoicing?

Under the GST regime, an invoice is the primary evidence of a transaction. It serves two main purposes:

1. Tax Liability: It determines the tax you (the supplier) owe to the government.
2. Input Tax Credit (ITC): It allows your client (the recipient) to claim credit for the tax they paid you.

If your invoice is invalid, your client cannot claim ITC. This makes your goods/services more expensive for them effectively, and they may stop doing business with you.

16 Mandatory Fields in a GST Invoice

According to GST Rules, a tax invoice must contain the following details:

• 1. Invoice Number: A unique consecutive serial number (max 16 characters).
• 2. Invoice Date: The date the invoice is issued.
• 3. Supplier Name & Address: Your business details.
• 4. Supplier GSTIN: Your 15-digit GST Identification Number.
• 5. Recipient Name & Address: The buyer's details.
• 6. Recipient GSTIN: If the buyer is registered. (Crucial for B2B).
• 7. Place of Supply: The state where the goods/services are consumed.
• 8. HSN / SAC Code: Harmonized System of Nomenclature (goods) or Service Accounting Code (services).
• 9. Description of Goods/Services: Clear details of what is sold.
• 10. Quantity: Number of units (if applicable).
• 11. Unit: Unit of measurement (kg, meter, pcs, etc.).
• 12. Total Value: Value of goods/services before tax.
• 13. Taxable Value: The amount on which tax is calculated (after discounts).
• 14. Tax Rate & Amount: Breakdown of CGST, SGST, IGST, and Cess.
• 15. Reverse Charge: Whether tax is payable on a reverse charge basis (Yes/No).
• 16. Signature: Digital or physical signature of the supplier.

GST Tax Calculations: CGST, SGST, IGST

The type of tax you charge depends on the location of the supplier and the recipient.

Intra-State Supply (Same State)

If you are in Maharashtra and selling to a client in Maharashtra:

• CGST (Central GST): Goes to the Central Govt.
• SGST (State GST): Goes to the State Govt.

Example: For an 18% tax rate, you charge 9% CGST + 9% SGST.

Inter-State Supply (Different States)

If you are in Maharashtra and selling to a client in Karnataka:

• IGST (Integrated GST): Goes to the Central Govt (which later settles with the state).

Example: For an 18% tax rate, you charge 18% IGST.

Types of Invoices Under GST

Not every document is a "Tax Invoice."

Document Type	When to Use
Tax Invoice	For taxable supplies to registered/unregistered persons. Allows ITC claim.
Bill of Supply	For exempt goods or by Composition Dealers. No tax charged. No ITC.
Receipt Voucher	Issued when receiving an advance payment.
Refund Voucher	Issued if advance is returned and no supply is made.
Debit/Credit Note	To revise the value of an already issued invoice.

How to Create a Compliant GST Invoice

Don't use Word or Excel. The risk of calculation error is too high. Use GST-compliant software like Invoicely.

1. Select Customer: Ensure their GSTIN is auto-filled and validated.
2. Add Items: Select products with pre-mapped HSN codes.
3. Check Place of Supply: The software should auto-calculate IGST vs CGST/SGST based on addresses.
4. Apply Discounts: If giving a discount, apply it before tax calculation.
5. Generate: Create the PDF.

Understanding HSN and SAC Codes

HSN (Harmonized System of Nomenclature): For goods.
SAC (Service Accounting Code): For services.

Requirement:

• Turnover < ₹5 Crore: 4-digit HSN required for B2B.
• Turnover > ₹5 Crore: 6-digit HSN required for all invoices.

Tip: Always use the correct code. Using a wrong code (e.g., taxing a 12% item at 5%) is a compliance violation.

E-Invoicing: The New Standard

As of 2025, e-invoicing is mandatory for businesses with a turnover exceeding ₹5 Crore (check latest notification as limits change frequently).

What is it? You must upload your B2B invoices to the Invoice Registration Portal (IRP) to generate an Invoice Reference Number (IRN) and a QR Code. This QR code must be printed on the invoice.

Without a valid IRN/QR code, the invoice is considered invalid for B2B transactions.

8 Common GST Invoice Mistakes

1. Missing GSTIN: Forgetting the buyer's GSTIN means they lose ITC.
2. Wrong Tax Head: Charging CGST/SGST for an inter-state supply.
3. Incorrect HSN: Leading to wrong tax rates.
4. Duplicate Invoice Numbers: Invoice numbers must be unique for the financial year.
5. Not Mentioning "Tax Invoice": The header must clearly state the document type.
6. Ignoring Reverse Charge: Failing to mark "Reverse Charge: Yes" when applicable (e.g., GTA services).
7. Manual Calculation Errors: Rounding off taxes incorrectly.
8. Time Limit Expiry: Issuing invoice >30 days after supply of services.

How Invoices Feed into Returns (GSTR-1 & GSTR-3B)

Your invoicing is the foundation of your tax returns.

• GSTR-1: Details of outward supplies (sales). Your B2B invoices uploaded here populate your client's GSTR-2A/2B.
• GSTR-3B: Summary return of sales and ITC.

If your invoice data in GSTR-1 doesn't match your GSTR-3B, you will get a notice from the tax department.

Frequently Asked Questions

Conclusion: Compliance Made Easy

GST compliance might seem daunting, but it follows a logical structure. By ensuring your invoices contain the 16 mandatory fields and using the correct tax heads, you protect your business from penalties and build trust with your clients.

Stop worrying about manual calculations. Switch to a system that understands Indian GST laws.