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Creating, issuing and tracking invoices is an important part of doing business and is important for having more cash flow in the business. Therefore, it is important for all entrepreneurs to know how to create an invoice with the basic content included in the invoice. In this article, we are reviewing the invoice process in India? 

What is the need of an Invoice? 

Invoicing is required to indicate the goods or services provided and the prices applicable to the various stakeholders. An invoice is required to collect payment from the customer, sales account, create financial statements and pay due tax to the government. In addition, invoices also serve as supporting documentation to a registered merchant and may be used to claim a service input tax or VAT liability. Therefore, invoicing plays a major role in any business. 

Required Fields of an Invoice 

All invoices must contain the following items: 

  • Name, address and registration number (service tax or VAT or other) of the supplier 
  • The nature of the goods or services provided or provided 
  • The value of goods or services provided or provided 
  • Tax rate (service tax or VAT), as applicable 
  • Discount is provided, if any 
  • Total amount without taxes 
  • Total taxable income 
  • Total amount includes taxes 

When to create an Invoice? 

An invoice can be created when delivery of goods / services is made or improvements to the supply of goods / services have been received. In the event of a continuous supply of goods or services, the invoice may be increased within a specified period from the date of completion of the milestone or by agreement. It is best to create an invoice as soon as possible to ensure the buyer pays on time. However, it is important to note that once the invoice is created, tax liability is also created. Therefore, it is recommended that the invoice be extended only to those who are good / services that may be paid for or have already been rendered. 

Basic Format of an Invoice 

The invoice can be issued to the consumer in electronic or printed format. There are no specific types defined by the Government. However, all invoices must contain the above details as authorized by law. In addition, all invoices must have a serial number and the same serial number should not be used on more than one invoice. 

  • Invoices can be enlarged three times with the original given to the consumer, issued by transporter, supplier triplicate and additional copy, if required. 
  • All invoices must be backed by the buyer’s purchase, packaging list (if available) and delivery challan. 
  • The invoice must be certified by a signed person authorizing the supplier. 

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