A wrongly issued GST invoice can cost your buyer their Input Tax Credit claim — and you a penalty notice. Yet thousands of Indian freelancers, consultants and small businesses issue invoices daily with missing HSN codes, wrong CGST/SGST split, or no invoice serial number. This guide covers every mandatory field, the CGST vs SGST vs IGST rule, e-invoicing thresholds, HSN codes, and the most common GST invoice mistakes — with a complete worked example.
A GST invoice (also called a Tax Invoice) is the formal document a GST-registered supplier must issue for every taxable sale of goods or services. It is the primary document that enables the buyer to claim Input Tax Credit (ITC) — meaning it directly affects how much GST the buyer pays to the government. An invalid invoice = no ITC for the buyer.
GST invoice vs bill of supply: A Tax Invoice is issued by regular GST-registered suppliers who charge GST. A Bill of Supply is issued by composition scheme dealers, exporters of exempt goods, or for exempt supplies — no GST is charged. Never issue a Tax Invoice if you are on the composition scheme — it is a serious violation.
Rule 46 of the CGST Rules mandates specific fields that must appear on every GST Tax Invoice. Missing even one field can invalidate the invoice and deny the buyer ITC.
| # | Mandatory Field | Details | B2B Required? | B2C Required? |
|---|---|---|---|---|
| 1 | Document title | The words "Tax Invoice" must appear prominently | Yes | Yes |
| 2 | Supplier GSTIN | Your 15-digit GST Identification Number | Yes | Yes |
| 3 | Supplier name & address | Registered name and address as per GST portal | Yes | Yes |
| 4 | Invoice number | Unique sequential number — resets each financial year | Yes | Yes |
| 5 | Invoice date | Date of issue — not supply date unless same | Yes | Yes |
| 6 | Recipient GSTIN | Buyer's 15-digit GSTIN | Yes | Only if buyer wants ITC |
| 7 | Recipient name & address | Buyer's registered name and address | Yes | Yes |
| 8 | HSN / SAC code | Harmonised code for goods / Service Accounting Code | Yes | Turnover-dependent |
| 9 | Description of goods/services | Clear description of what is being supplied | Yes | Yes |
| 10 | Quantity and unit | For goods: quantity in standard unit of measurement | Yes | Yes |
| 11 | Taxable value | Value before GST — discount already applied | Yes | Yes |
| 12 | GST rate & amount | CGST+SGST (intra-state) or IGST (inter-state) | Yes | Yes |
| 13 | Total invoice value | In figures AND in words | Yes | Yes |
| 14 | Place of supply | State name and code — determines CGST/SGST vs IGST | Yes | Yes |
| 15 | Signature | Physical or digital signature of authorised signatory | Yes | Yes |
This is the most critical and most frequently misunderstood aspect of GST invoicing. The rule is determined entirely by whether the transaction is intra-state (same state) or inter-state (different states).
| Transaction Type | What to Charge | How to Split | Example at 18% GST |
|---|---|---|---|
| Intra-state (same state) | CGST + SGST | Split equally — half each | 9% CGST + 9% SGST |
| Inter-state (different states) | IGST only | Full rate as IGST | 18% IGST |
| Export of goods/services | Zero-rated (0% or IGST with refund) | IGST at 0% or with refund claim | 0% or claim IGST refund |
| Import (buyer receives from abroad) | IGST + Customs Duty | Charged by customs on import | IGST at applicable rate |
Never charge CGST+SGST and IGST on the same invoice. This is one of the most common and serious GST errors. If you charge CGST+SGST on an inter-state transaction (or IGST on an intra-state transaction), it creates a tax liability mismatch that the buyer cannot claim ITC on, and triggers notices from GST authorities. Always determine the state of supply before choosing the tax type.
Here is what a correctly formatted GST service invoice looks like for a freelance web developer in Bengaluru billing a Mumbai client (inter-state — IGST applies).
Why IGST and not CGST+SGST here: The supplier (Rajan) is in Karnataka (state code 29) and the buyer (TechVenture) is in Maharashtra (state code 27) — two different states. This is an inter-state supply. IGST applies at the full 18% rate. If Rajan had a client also in Bengaluru (Karnataka), he would charge 9% CGST + 9% SGST instead.
HSN (Harmonised System of Nomenclature) codes classify goods for GST purposes. SAC (Services Accounting Code) codes classify services. Both must appear on GST invoices — the correct code determines the applicable GST rate.
| Annual Turnover | HSN Digits Required (Goods) | SAC Required (Services) |
|---|---|---|
| Below ₹1.5 crore | Optional for B2C; mandatory for B2B | Mandatory for all invoices |
| ₹1.5 crore – ₹5 crore | 2-digit HSN mandatory | Mandatory for all invoices |
| Above ₹5 crore | 4-digit HSN mandatory | Mandatory for all invoices |
| Service Type | SAC Code | GST Rate |
|---|---|---|
| IT software development and design | 998314 | 18% |
| Consulting / management consulting | 998311 | 18% |
| Accounting and auditing services | 998222 | 18% |
| Legal services | 998211 | 18% |
| Advertising and marketing services | 998361 | 18% |
| Photography and videography | 999219 | 18% |
| Architecture and design services | 998322 | 18% |
| Freelance writing / content services | 998391 | 18% |
| Tuition / coaching / education | 999291 | 18% (private) / Exempt (govt) |
| Healthcare (doctors / hospitals) | 999311 | Exempt |
E-invoicing in India does not mean creating an invoice electronically — it means generating a government-validated Invoice Reference Number (IRN) from the Invoice Registration Portal (IRP) before sharing any invoice with the buyer.
How to generate IRN: Upload invoice data to any of the six authorised IRPs (Invoice Registration Portals) — the government IRP at einvoice1.gst.gov.in, or private IRPs like Clear, Tally, Zoho, or SAP. The IRP validates data, generates IRN and QR code, and returns the signed e-invoice. This must happen before the invoice is shared with the customer — not after.
| Feature | B2B Invoice | B2C Invoice |
|---|---|---|
| Buyer GSTIN required? | Yes — mandatory | Only if buyer wants ITC |
| HSN/SAC code | Always mandatory | Depends on turnover |
| ITC availability to buyer | Yes — buyer claims ITC | No — end consumer, no ITC |
| Invoice below ₹200 | Individual invoice required | Can consolidate multiple invoices |
| E-invoicing | Required above ₹5Cr turnover | Not required for B2C |
| Reported in GSTR-1 | Invoice-wise reporting | Consolidated in B2CS or B2CL |
| Type of Supply | Invoice Must Be Issued By |
|---|---|
| Supply of goods (movement involved) | At the time of removal / delivery |
| Supply of goods (no movement) | At the time goods are made available to buyer |
| Supply of services (general) | Within 30 days of service completion |
| Banking and financial services | Within 45 days of service completion |
| Continuous supply of services | On due date of payment or completion of each event |
This is the most common and consequential GST invoice error. If you charge the wrong tax type, the buyer cannot claim ITC on that invoice — they pay GST twice effectively. The correct rule: same state = CGST+SGST (split equally); different states = IGST only. Check the buyer's GSTIN state code before every invoice to determine the correct tax type.
GST rules require invoices to be issued in a consecutive sequential series within each financial year. Gaps in the series (e.g., jumping from INV-001 to INV-005) or resetting mid-year attract scrutiny. Maintain a single continuous series starting from 1 or a fixed prefix (e.g., FY26/001) from 1 April each year. Never delete or reuse an invoice number — issue a credit note for cancellations instead.
Many freelancers and small businesses either omit the SAC code entirely or use the wrong one. An incorrect SAC code means the wrong GST rate is potentially applied — which creates mismatches in GSTR-1 and 3B, leading to demand notices. Look up your exact SAC code at cbic.gov.in or use ToolLoom's GST Invoice tool which includes SAC code lookup built in.
The supplier name, address and GSTIN on the invoice must exactly match the details registered on the GST portal. If you changed your business address or name and have not updated it on the portal, your invoices are technically invalid. Buyers cross-check your GSTIN on the GST portal before claiming ITC — a mismatch can deny their ITC claim and raise a dispute.
Businesses above ₹5 crore turnover that continue issuing regular invoices without IRN are non-compliant from the date e-invoicing became mandatory for them. Each such invoice is invalid — the buyer cannot claim ITC, and the supplier faces penalties up to ₹10,000 per invoice. Check your applicable e-invoicing threshold and integrate with an IRP (Clear, Tally, Zoho GST) before the compliance date.