Section 31 of the CGST Act
- Farheen Mukadam
- Jul 30
- 7 min read
There is more to tax invoices than simply checking compliance boxes, which is why Section 31 of the CGST Act is significant. You might be claiming Input Tax Credit (ITC) or keeping your consumers or clients informed. They are about making sure your business runs properly.
Table of Contents
What is Section 31 of the CGST Act?
Consider Section 31 to be your manual for creating tax invoices. It provides solutions to important queries such as:
When is the right time to send out an invoice?
What information must be included?
What occurs if no invoice is sent?
For instance, A owns a boutique in Delhi. She provided a destination wedding planner with personalised outfits last year. She failed to put the Place of Supply on her invoice; therefore, it was incomplete. It caused a more than two-month delay in the buyer's Input Tax Credit (ITC) claims and her own payment.
Section 31 Clause by Clause
31(1): General guidelines for sending out tax bills.
31(2): Rules unique to the sale of products.
31(3): Guidelines for additional credit notes, debit notes, and invoices.
31(4): Specified conditions for supplies flowing between states.
31(5): The circumstances in which a "bill of supply" may take the place of a tax invoice.
31(6): Export invoices and other documentation requirements.
Knowing these provisions will enable you to modify your billing procedures according to the nature of your company.
When to Issue a Tax Invoice?
The nature of the transaction determines when invoices are issued:
For merchandise:
When Moving Physically: Before or during delivery, send out the invoice.
Without Movement: As soon as the goods are accessible, issue the invoice.
Example: When shipping 500 kg of rice from a wholesale source in Delhi, the invoice must be sent with the package.
For Services: You have 30 days after finishing the service, so you have some leeway. For instance, let's say you work as a wedding photographer in Mumbai. You have up to one month from the time the final edited album is sent to send the invoice.
For Ongoing Supply (Services or Goods): Observe the conditions specified in the contract. For example, in accordance with their agreement, a vendor who provides weekly raw materials to a construction company sends out bills every two weeks.
Elements of a GST-compliant Invoice
The following information must be on the invoice:
Seller information, including name, address, and GSTIN.
Purchaser information, including name, address, and GSTIN (if registered).
The invoice number is distinct and sequential.
The issue date, which cannot be changed.
Goods/Services Description, which includes total value, quantity, and unit pricing.
Breakdown of taxation, indicating the relevant amounts for SGST, CGST, and IGST.
Place of Supply, which establishes the taxes that apply.
A digital or physical signature.
Deadline for Tax Invoicing
Here's a brief reference to deadlines:
Type of Supply
| Deadline
|
Goods requiring physical movement | Before or at the time of dispatch |
Goods without movement | When made available |
Continuous supply of goods | According to contract terms |
Services | Within 30 days of completion of services |
Continuous supply of services | As per the billing cycle mentioned in the agreement |
Fulfilling these deadlines guarantees seamless operations and lowers the possibility of fines.
Exemptions from Issuing Invoices
A tax invoice is not important for every transaction. The following are some exclusions:
Transactions of low value: Unless the customer requests a complete invoice, a simplified bill is acceptable if the sum is less than ₹200.
Exempt Goods/Services: Records are still crucial even though fresh fruits and educational services are exempt from GST.
Scheme of Composition: Instead, taxpayers may issue a bill of supply.
Consequences of Non-Compliance
You could get into trouble if you disregard Section 31.
Financial sanctions: Although Rs. 500 for each missed or inaccurate invoice might not seem like much, it adds up.
Buyers' Delayed ITC: Your clients may no longer be eligible for the ITC if your invoice is inaccurate or sent after the deadline. Your commercial connections may be strained as a result.
Scrutiny and Audits: Your chances of being audited are increased if you consistently fail to comply.
Conclusion
Companies that want to ensure correct GST documentation, claim input tax credits, and avoid problems must understand and follow Section 31 of the CGST Act. Tax invoices are essential records in the GST system that encourage responsibility and openness in dealings. Businesses can simplify their invoicing procedures and maintain compliance with GST regulations by following the recommended principles.
Frequently Asked Questions
What is Section 31 of the CGST act?
The tax invoice mentioned in section 31 of the CGST Act, 2017 is referred to as a "invoice" or "tax invoice" under the GST regime. This clause requires that every supply of goods, services, or both be accompanied by an invoice or bill of supply. An invoice must be issued by the person providing the products, services, or both.
What details need to be on a tax invoice?
All the essentials should be included in a tax invoice.
Details about the buyer and supplier
A distinct invoice number
Product or service details
A transparent tax breakdown.
When to issue a tax invoice according to Section 31?
For products: either prior to or during delivery.
Regarding services: 30 days after completion.
Are there exemptions from issuing tax invoices?
Yes, including for exempt supply and low-value transactions.
Is there a specific format for GST invoices?
The invoice must include all necessary information as required by Section 31. However, there is no set structure.
What is the time limit to issue invoices for services?
30 days after the service is completed, a tax invoice for the services must be sent.
What is the relevance of Section 31 for digital service providers and freelancers under GST?
Section 31 mandates issuing tax invoices for supply of goods or services. For digital providers or freelancers, failing to issue timely invoices (especially for monthly recurring services) may block Input Tax Credit claims for clients under Section 16.
How does delayed invoicing under Section 31 affect ITC eligibility under Section 16(2)?
If a supplier delays invoice issuance beyond the permitted time, the recipient risks ineligibility for ITC unless conditions under Section 16(2) are fulfilled. This includes possession of invoice and receipt of goods/services within the allowed time window.
What are the time limits for invoice issuance under Section 31(2) for services?
For services, a tax invoice must be issued either before or within 30 days of providing the service. For banking and insurance companies, this extends to 45 days. Failure impacts compliance ratings and ITC for recipients.
Can an invoice be revised under Section 31 if incorrect details were issued initially?
Yes. A revised invoice under Rule 53 and Section 31(3)(a) can be issued for correcting errors. It must reference the original invoice number and comply with time limits for adjustment in GSTR-1 and GSTR-3B filings.
Does Section 31 require a tax invoice for advances received for future supply?
No invoice is needed at the time of receiving advance for goods (as per notifications). However, for services, an advance receipt voucher must be issued under Section 31(3)(d), and tax must be paid on it.
Are e-commerce platforms like Amazon or Swiggy responsible for invoicing under Section 31?
Yes. If they are the supplier of record or operate under Section 9(5), they must issue tax invoices for each transaction. Otherwise, they must capture and maintain invoice details issued by vendors for GSTR-8 returns.
How does Section 31 interact with e-invoicing under Rule 48(4)?
For businesses above prescribed turnover thresholds (currently ₹5 crore+), tax invoices must be e-invoices generated with IRN (Invoice Reference Number). Failure to comply invalidates the invoice under Section 31 and ITC may be denied.
What happens if a business issues a delivery challan instead of an invoice under Section 31?
A delivery challan may be issued only under certain conditions (e.g., goods sent for job work, supply on approval basis). Misuse leads to violations under Section 122, attracting penalties and denial of ITC.
Is a bill of supply under Section 31 a valid document for availing ITC?
No. A bill of supply is used when GST is not chargeable (e.g., for composition taxpayers or exempt goods). It does not entitle the recipient to claim ITC as no GST is levied.
Can tax invoices under Section 31 be issued electronically and signed digitally?
Yes. As per Rule 46, invoices may be digitally signed and sent electronically. However, they must be compliant with e-invoice schema (if applicable) and retained for audit under Section 35.
What is the consequence of issuing backdated invoices under Section 31 for services?
Backdating invoices can lead to penal consequences under Section 122 and mismatch in GSTR-1 vs GSTR-3B, impacting reconciliation and potentially resulting in demand under Section 73/74 for underpaid tax.
How is invoice cancellation governed under Section 31 and GST rules?
Once a tax invoice is issued, it cannot be cancelled outright. A credit note under Section 34 must be issued and reported. Improper cancellations outside allowed time limit (30th Nov of next FY) can disallow ITC reversals.
Do freelancers or content creators need to issue GST invoices under Section 31?
Yes, if registered under GST and providing taxable services, they must issue an invoice with HSN/SAC codes. Not doing so may be a violation, especially if client claims ITC under Section 16.
Are self-invoices under Section 31(3)(f) mandatory for reverse charge purchases?
Yes. In case of RCM transactions (e.g., from unregistered suppliers or certain services), the recipient must generate a self-invoice under this clause and discharge tax liabilities accordingly.
What are the penalties for non-issuance of invoice under Section 31?
Under Section 122, the penalty is ₹10,000 or equivalent to the tax evaded—whichever is higher. It also leads to compliance rating drops under Section 149 and disrupts ITC chain for the buyer.
Is there any prescribed format for GST invoices under Section 31?
While there's no fixed format, Rule 46 mandates specific fields—invoice number, GSTIN, HSN/SAC, date, taxable value, tax rate, etc. Missing fields make invoices invalid for ITC purposes under Section 16.
Can businesses issue consolidated invoices under Section 31 for B2C supplies?
Yes, for B2C unregistered consumers, a consolidated invoice can be issued daily. However, B2B invoices must be separate and reported with GSTIN in GSTR-1 for valid ITC claims by recipients.
What are the rules for invoicing under Section 31 for exports?
For exports (zero-rated), invoices must mention “Supply meant for export under bond or LUT” and include mandatory fields. FIRC/BRC must match for refund of ITC under Section 54.
Does Section 31 require invoice issuance for intra-branch transfers?
Yes. Even inter-state stock transfers between branches of the same PAN but different GSTINs are taxable supplies requiring invoice issuance under Section 31(1)(a).
How are advance payments handled in Section 31 with partial deliveries or milestone billing?
For milestone-based or part delivery supplies, invoices can be raised in phases. Each must reflect value proportionate to supply. ITC is allowed accordingly and is cross-checked via GSTR-2B.
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