In this modern business marketplace, invoices are crucial documents for sales and ensuring financial transactions.Invoices are an instrument that drives the path for successful business. It serves as the proof for every transaction made between the business owner and the client.
Among the various types of invoices, the tax invoice is one of the most important for businesses and government.It plays a main role in maintaining tax compliance and transparency. Retail Invoice is a commercial document used in business to record the sales of goods or services.
In this article let us see the differences between retail invoice and tax invoice.
What is a Retail Invoice?
A retail invoice is a document that retail business owners use to record the sales of their goods and services to their end customers. When the transaction is made between the buyer and the registered seller, once the transaction is completed the seller generates an original and duplicate copy of an invoice. The seller sends the original copy to the buyer and keeps the duplicate copy with him for proof.
No need to add the GST number to the retail invoice and it’s not mandatory. Retail Invoice is suitable for B2C transactions. It is essential for businesses to track the sales of the products, customer payments etc. Retail invoices include the payment modes, are viewed at the time of transactions and they act as a bill for customers.
The elements of retail invoices are listed below:
- Invoice Number
- Invoice date when issued to the buyer
- Buyer details
- Seller details
- Quantity of purchased product
- Price of a single stock
- Final amount
- Add discounts (if available)
- Seller’s signature
Advantages of Retail Invoice
- Retail invoices record all the sales details, and they are used for accounting purposes.
- Retail invoices record all the customer details, their purchase details and the date of payment made by the customer.
- It tracks the stocks availability in the warehouse and makes sure that the products are available when they are needed.
- Retail invoices track the customer details and their purchase history. It helps the business to customize the transactions and engagements with customers.
- Retail invoices track product price details and discounts issued to the customers. Using these records, business owners should make decisions for future pricing.
Disadvantages of Retail Invoice
- Retail invoices carry only a limited amount of information when compared to the tax invoice. GST and VAT details are not mandatory here.
- Retail invoices do not have any legal demand, and they will not be accepted as evidence for any taxable purpose.
- Even if we purchased with the help of GST, it is impossible to claim the tax credit without submitting the tax invoices.
- Retail invoices do not have any detailed information about the quantity of goods and services sold to the customers. It creates some conflicts at the last moment.
- Compared to tax invoices, retail invoices don’t have a detailed report of transactions, so it is hard to maintain the financial records of the business.
What is a Tax Invoice?
Tax invoice is a legal document used for the business to issue their taxable supply of goods and services. Itcontains details like descriptions, quantity, price of the goods or services, tax chargedsubsequently and other particulars if they needed.
Tax invoices are only used suitable for B2B businesses. The registered sellers generate one original copy and two duplicate copies. The original copies are handed over to the buyers and the sellers keep the remaining two duplicate copies with them.
It is used as an essential tool for businesses. During the end of the seller should submit the invoices to the tax authorities on time without any delay.
The tax invoices contain the following details:
- Invoice number
- Invoice date that issued to the buyers
- Seller’s name and details
- Buyer’s name and details
- Must add Tax Identification Number (TIN)
- Price of single stock
- Final amount
- Tax charges
- Authorized signature
Advantages of Tax Invoice
- Every business registered under GST/VAT needs a Tax invoice.
- A tax invoice is used to claim the tax credit when the seller does purchase under GST.
- Tax invoices maintain the records of all sales transactions, which helps in auditing and for tax filing.
- Tax invoice shows detailed information about the sales of goods or services, total amount and the GST amount.
- Tax invoices help to build trust and confidence with the customers by providing proper purchase records.
Disadvantages of Tax Invoice
- To understand the tax invoice is a difficult concept. It is tough to identifythe invoices that do not belong to the background of law of taxes and regulations.
- Tax invoices take more time to prepare it, and the businesses need to hire more staff to do this job.
- Its cost is high, and distribution expenses are also more. Businesses with large transactions find it hard to manage tax invoices.
- Businesses should maintain the records of all tax invoices for a specific time. It is a big deal for the business owners and occupies more space in the company.
- Make sure that the business follows all the tax laws, rules and regulations. It will take more time,and we should get advice from the experts.
Difference Between Retail & Tax invoice
| S.No | Retail Invoice | Tax Invoice |
| 1. | It is used for Business to Customers(B2C) transactions | It is used for Business to Business(B2B) transactions |
| 2. | No need to add GST information | GST information is mandatory |
| 3. | It doesn’t have any format | It has a particular format which is mentioned by the law department |
| 4. | Retail invoicesare issued to the buyers for the amount of purchase of goods or services. | Tax invoices are issued for the purchaser to pay the tax amount. It is assistedby the registered dealers. |
| 5. | In retail invoices, the products are sold for resale purposes. | In tax invoices, the products are mostly sold to the end customers. |
| 6. | It includes all the taxes from the seller to the customer | It contains the tax should pay to the government |
| 7. | No possibilities to claim the credits | Easy to claim the credits |
| 8. | Hard to maintain the records of invoices | Easy to maintain the records of invoices |
| 9. | Seller needs to register their business | Both sellers and buyers need to register their business |
| 10. | Retail invoices are issued to the non-taxpayers | Tax invoices are issued to the taxpayers |
Here we investigated the needs and differences between the retail invoice and tax invoice. Whatever invoicesplay an important role in business, using invoice generator tool you can create your own invoiceseasily.
