How soon must we issue a GST invoice for services?

You finished a piece of work for a client. The money has not come in yet. Your accountant asks, "Should we raise the invoice now or wait?" The answer is not "whenever". For services, GST sets a clock, and it starts running on the day you supply the service.

This article is about that clock. It covers when a registered company must issue a tax invoice for services, what changes for services that run on and on, and what happens if you miss the date. Advance payments are a separate question and are not covered.

The situation: services have a window, not a fixed moment

For goods, the Act is strict. The invoice goes out before or at the time the goods are removed or delivered (s.31(1), Central Goods and Services Tax Act 2017).

Services are treated differently. A registered person supplying taxable services must issue a tax invoice "before or after the provision of service but within a prescribed period" (s.31(2), Central Goods and Services Tax Act 2017). So you may invoice before the service, while you provide it, or after it. But the window is not open forever.

The general rule: 30 days from the date of supply

The prescribed period is in the rules. The invoice for a taxable supply of services "shall be issued within a period of thirty days from the date of the supply of service" (rule 47, Central Goods and Services Tax Rules 2017).

Two points to note.

• The clock runs from the date you supplied the service. It does not run from the date you decide to bill, or the date the client approves your work.
• It is an outer limit. Nothing stops you from invoicing earlier, and for many businesses it is better to do so.

If it is not obvious on which day a service was supplied, have your CA confirm the supply date before you start counting.

Banks, insurers and NBFCs get 45 days

A longer period applies to one group. Where the supplier of services is an insurer, a banking company or a financial institution, including a non-banking financial company, the period is forty-five days from the date of supply of the service (first proviso to rule 47, Central Goods and Services Tax Rules 2017). The invoice, or "any document in lieu thereof", can be issued within that period.

If you are not in this group, the 30-day limit applies to you.

A further relaxation exists for an insurer, banking company, financial institution (including an NBFC), telecom operator or other notified class of supplier making taxable supplies between distinct persons as specified in section 25. Such a supplier may issue the invoice before or at the time it records the supply in its books, or before the quarter in which the supply was made ends (second proviso to rule 47, Central Goods and Services Tax Rules 2017). Most operating companies will not use it.

Services that continue over time

Many services are not delivered on one day. A retainer, a monthly maintenance contract or a subscription runs for months. The Act has a separate rule for these.

A "continuous supply of services" means services provided, or agreed to be provided, "continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations" (s.2(33), Central Goods and Services Tax Act 2017). The Government can also notify other services as continuous supply.

For such services the invoice date depends on the contract (s.31(5), Central Goods and Services Tax Act 2017):

• If the due date of payment can be worked out from the contract, issue the invoice on or before the due date of payment.
• If the due date cannot be worked out from the contract, issue the invoice before or at the time you receive the payment.
• If payment is linked to the completion of an event, issue the invoice on or before the date that event is completed.

This is "subject to" the rule on advance payments, which is not covered here (s.31(5), read with s.31(3)(d), Central Goods and Services Tax Act 2017).

So a retainer that falls due on the 5th of every month is invoiced on or before the 5th. A milestone fee, such as "payable when the audit report is signed", is invoiced on or before the day the milestone is completed.

When a contract ends midway

Sometimes a service contract stops before the work is complete. In that case the invoice is issued "at the time when the supply ceases", and only "to the extent of the supply made before such cessation" (s.31(6), Central Goods and Services Tax Act 2017).

Do not wait for a final settlement with the client. Invoice what you have supplied up to the date the contract stopped.

Why the date matters: it feeds the time of supply

The invoice date is not just a bookkeeping point. It affects when your GST liability arises.

For services, the liability to pay tax arises at the time of supply (s.13(1), Central Goods and Services Tax Act 2017). The time of supply is the earliest of the dates given in s.13(2). If you issue the invoice within the period set under s.31, the earlier of the invoice date and the date of receipt of payment counts. If you do not issue the invoice within that period, the earlier of the date of provision of the service and the date of receipt of payment counts (s.13(2)(a) and (b), Central Goods and Services Tax Act 2017).

In plain words: a late invoice does not push your tax date out. It pulls the tax date back to the day you provided the service. You may then owe tax for an earlier month, and your return for that month may already have been filed.

Invoices you must raise for reverse charge supplies

Some invoices are raised by the buyer, not the seller. Where a registered person is liable to pay tax under section 9(3) or 9(4) and receives goods or services from an unregistered supplier, the recipient must issue an invoice (s.31(3)(f), Central Goods and Services Tax Act 2017).

The period is 30 days from the date of receipt of the supply (rule 47A, Central Goods and Services Tax Rules 2017). The recipient must also issue a payment voucher when making payment to that supplier (s.31(3)(g), Central Goods and Services Tax Act 2017).

Small invoices and special cases

• Below ₹200. A registered person may skip the tax invoice if the value of the supply is less than two hundred rupees, subject to prescribed conditions (s.31(3)(b), Central Goods and Services Tax Act 2017).
• Exempt services or composition dealers. You issue a bill of supply instead (s.31(3)(c), Central Goods and Services Tax Act 2017).
• Categories the Government notifies. The Government can, on the Council's recommendation, specify services where another document is treated as the tax invoice, or where no tax invoice is needed (proviso to s.31(2), Central Goods and Services Tax Act 2017). Check the current notifications on the GST portal for your service.

Step by step: running the invoice clock in your company

• Write down the supply date for each service. For a one-off job, it is the day of provision. For a retainer, it is set by the contract under s.31(5).
• Classify the supply. Is it a one-off service, a continuous supply under s.2(33), or a supply by a bank or NBFC? Each has its own clock.
• Set the deadline. Thirty days from supply for most companies (rule 47). Forty-five if you are an insurer, bank or financial institution (first proviso to rule 47).
• Prepare the invoice with the required particulars. Rule 46 lists them. These include your name, address and GSTIN, a consecutive serial number of not more than sixteen characters, unique for the financial year, the date of issue, the recipient's details, description, taxable value, rate and amount of tax, place of supply for inter-State supplies, and a signature or digital signature (rule 46, Central Goods and Services Tax Rules 2017).
• Issue two copies. Marked "ORIGINAL FOR RECIPIENT" and "DUPLICATE FOR SUPPLIER" (rule 48(2), Central Goods and Services Tax Rules 2017).
• Check whether e-invoicing applies to you. The Government notifies a class of registered persons who must prepare invoices after obtaining an Invoice Reference Number from the portal. For such a person, an invoice issued in any other manner "shall not be treated as an invoice" (rule 48(4) and (5), Central Goods and Services Tax Rules 2017). The turnover limit is set by notification. Check the current limit on the GST portal before you decide you are outside it.
• Report the invoice serial numbers in your return. The serial numbers of invoices issued in a tax period are furnished through the common portal in FORM GSTR-1 (rule 48(3), Central Goods and Services Tax Rules 2017).

What not to do

• Do not wait for the money. The invoice duty does not depend on payment. For a one-off service, the 30 days run from supply, not from receipt of the fee.
• Do not skip the invoice for a "friendly" client. Supplying services "without issue of any invoice" is an offence for which the penalty is ten thousand rupees or an amount equal to the tax evaded, whichever is higher (s.122(1)(i), Central Goods and Services Tax Act 2017).
• Do not issue a wrong or false invoice to fix a timing problem. The same clause covers an "incorrect or false invoice" (s.122(1)(i), Central Goods and Services Tax Act 2017). Date each invoice with the day you actually issue it.
• Do not use the 45-day or quarter-end relaxations unless your business is in the class named in the provisos to rule 47 (rule 47, Central Goods and Services Tax Rules 2017).

What to do now

• Next step: List every service you supplied in the last 60 days. Mark those with no invoice yet. Issue those invoices now.

Cite: s.31(2), Central Goods and Services Tax Act 2017; rule 47, Central Goods and Services Tax Rules 2017.

• Deadline: 30 days from the date of supply of the service (45 days for an insurer, bank or financial institution). For continuous supply, the due date of payment, or the date you receive payment, or the date the event is completed, as the contract provides.

Cite: rule 47, Central Goods and Services Tax Rules 2017; s.31(5), Central Goods and Services Tax Act 2017.

• Consequence: If you miss the period, the time of supply moves back to the date you provided the service, so tax may fall due for an earlier period. Supplying without any invoice attracts a penalty of ten thousand rupees or the tax evaded, whichever is higher.

Cite: s.13(2)(b) and s.122(1)(i), Central Goods and Services Tax Act 2017.

Have a CA review your facts before you act or file.

FAQs

1. Is the 30 days counted from the date of the contract or from the date of delivery?
From the date of supply of the service (rule 47, Central Goods and Services Tax Rules 2017). The contract date matters only if it fixes when the service is supplied.

2. Can we issue the invoice before we provide the service?
Yes. The Act allows it "before or after the provision of service" within the prescribed period (s.31(2), Central Goods and Services Tax Act 2017).

3. We have a monthly retainer. Do we invoice every month?
If the contract fits the definition of continuous supply of services, the invoice follows the contract's payment date, or the receipt of payment, or the completion of the event (s.31(5), Central Goods and Services Tax Act 2017). In practice that is usually a monthly invoice. Read your contract for the payment date.

4. We are an NBFC. Do we get 45 days for every invoice?
The first proviso to rule 47 gives 45 days to an insurer, banking company or financial institution, including an NBFC, as the supplier of services (Central Goods and Services Tax Rules 2017). Confirm with your CA that the service you are billing is a taxable supply by you in that capacity.

5. We invoiced on day 40. What is the exposure?
For the late period, the time of supply for that service is taken as the date of provision, or the date of receipt of payment if that was earlier (s.13(2)(b), Central Goods and Services Tax Act 2017). That may mean the tax was due in an earlier return. Whether any further action applies depends on your facts. Take your CA's advice before you file a correction.

6. Do we need an invoice for a service worth less than ₹200?
A registered person may not issue a tax invoice if the value is less than ₹200, subject to the conditions and manner prescribed (s.31(3)(b), Central Goods and Services Tax Act 2017).

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See Also

• A customer paid an advance: when does GST become payable?
• ASMT-10 scrutiny notice: how to reply within 30 days
• Do we pay GST under reverse charge on freight, advocate fees and director fees?