GST invoices, advances, discounts, credit and debit notes

Rule 46 of the CGST Rules lists the details. They have not changed since July 2017, apart from the signature, the HSN or SAC digits, the customer’s State on app-booked bills, and two lines for businesses on e-invoicing.

For services, make the invoice in two copies, “original for recipient” and “duplicate for supplier”. An e-invoice with an IRN needs no copies.

A ticket as the invoice. A supplier of passenger transportation may use a ticket in any form as its tax invoice, without a serial number or the passenger’s address (rule 54(4)). Our reading: the rules do not define that service, so whether a cab rented with a driver, rather than sold per trip, can use this is not settled.

• Within 30 days of the service (rule 47). A duty done on 5 March is billed by 4 April.
• A monthly contract that is a continuous supply of services is billed on or before the payment due date in the contract, or when you are paid if the contract sets no date.
• Bills under ₹200 to an unregistered customer who does not want one: one combined invoice at the end of the day.
• Exempt services, or if you are under the composition scheme: a bill of supply instead of a tax invoice. A mix of taxable and exempt services to an unregistered customer can go on one invoice-cum-bill of supply.
• Registration granted from an earlier date: revised invoices for the supplies in between, within one month of getting the certificate.
• Registration suspended: no tax invoices and no GST until it is revoked.

For a service, GST is due on the earlier of the invoice date (or the service date, if you invoice later than the 30-day limit) and the date you are paid. So an advance carries GST in the month it arrives, not the month of the trip. When it arrives, issue a receipt voucher (rule 50). If the trip never happens and no invoice was issued, return the money with a refund voucher (rule 51). If an invoice was already issued, use a credit note instead. Keep a separate account of advances and how you adjusted them.

CBIC’s Circular 178/10/2022 (3 August 2022) settled most of this, as its reading of the existing law:

• A cancellation fee, or the part of an advance or deposit you keep, pays for “allowing cancellation”. That is part of the booked service, so it takes the same rate, and is exempt if the service is exempt. The circular names journeys, tours and hotel stays. It never names cabs, so applying it to a cancelled cab booking is our reading of its reasoning.
• A no-show: a fare forfeited because the passenger did not turn up is taxed like the journey.
• Liquidated damages paid only to make good a loss from breach of contract are not payment for a supply, so no GST. A penalty a corporate customer deducts from your bill for a late cab most likely fits this, so the customer charges you no GST on it. Whether you may also cut your own bill’s taxable value by a credit note for deficient service is not settled. Both points are our reading.
• A fine for a bounced cheque is not payment for any service: no GST.

Interest, a late fee or a penalty for late payment of your bill is part of the bill’s value (section 15(2)(d) of the CGST Act), so it takes the trip’s rate. It is not exempt like interest on a loan: CBIC’s Circular 102/21/2019 separates penal interest a seller charges on its own price, which is taxable, from interest a separate lender charges, which is exempt. That a cab operator’s interest falls in the first case is our reading.

• On the invoice: a discount shown on the invoice is simply left out of the taxable value.
• Later, until 31 October 2026: it cut your GST only if it was agreed at or before the supply, linked to particular invoices, and the customer reversed the matching credit.
• Later, from 1 November 2026 (Finance Act 2026, brought into force by Notification 03/2026): a GST credit note plus the customer’s reversal of the matching credit is enough. No prior agreement or invoice link is needed.
• A commercial credit note without GST is allowed (Circular 92/11/2019). It does not cut your GST, and the customer reverses nothing (Circular 251/08/2025). Our reading is that this still holds after 1 November 2026.

Proof of the customer’s reversal. From 26 June 2024 to 30 September 2025, Circular 212/6/2024 let suppliers show it with a CA or CMA certificate, or with the customer’s own undertaking where the tax on a year’s discount notes to it was ₹5 lakh or less. Circular 253/10/2025 withdrew that procedure from 1 October 2025; the customer still has to reverse.

One note can cover several invoices of a financial year (since 1 February 2019). Report notes in GSTR-1 Table 9B, or net them into Table 7 for small B2C bills. The customer’s side of a credit note, including keeping it pending, is in E-invoicing and GST returns.

When you pay GST under reverse charge on a purchase from an unregistered supplier, you issue the invoice yourself: within 30 days of the purchase since 1 November 2024. You also issue a payment voucher whenever you pay a reverse-charge supplier, registered or not. Who does what is set out in Reverse charge on cab hire to companies.