A tax invoice is a legal document that is issued by a registered dealer to the purchaser in an event of a sale which shows the amount of tax payable. It is an ordinary format invoice required under GST system. A tax invoice also shows the GST on the products and services provided. Generally a tax invoice must be issued within 21 days from the time of supply goods. A tax invoice is very important because it is used in day to day operations of the business and it is also the primary evidence to support an input tax credit claim. The basic function of issuing tax invoice is to avail input tax credit.
Generally a tax invoice plays an important role in any country’s tax system as the registered dealer issues invoices for identifying a transaction. It is special type of invoice which contains particular data that is required for the effective operation of the GST system. Basically the information a tax invoice must show depends on the value of goods and services provided. These invoices had to submit the details at the end of the financial year to the related tax authorities because this is an important instrument which is used by the government to avoid tax dodging.