Tax Invoice

What is Tax Invoice?

A tax invoice is a document issued by a seller to a buyer that includes the description, quantity, and price of the goods or services sold, as well as any applicable taxes.

Businesses are required to collect and report various taxes (HST, GST, and VAT) from their customers on their products and services. A tax invoice is issued by one registered vendor to another in order to obtain input tax credit. It is simply a summary invoice that can be used for GST/HST reporting, whether you report monthly, quarterly, or annually. You must provide a tax invoice if your customer is GST registered.

It is a legal document issued by a certified seller to the buyer of their goods that shows the amount of tax that is owed. It typically includes the following information: product name and description, invoice date, invoice number, tax amount, and services rendered.

These invoices can be original or duplicate copies, depending on the situation. Because there is no such limit, product supply can be adjusted based on the availability of registered suppliers. Essentially, it is a summary invoice that includes the goods sold, the tax charged at the time of service, and any other service taxes.

As a result, it is prima facie evidence that a single registered vendor provided goods and services to GST-registered customers seeking input tax credit.

The seller prepares tax invoices and expects payment from their client. It is useful for buyers who want to claim tax credits.

What are the essential elements of a tax invoice?

The following information must be provided when creating the tax invoice:

  • Date of Invoice
  • Invoice number
  • Customer name, and contact information
  • Shipping address
  • Product information
  • Tax payable Amount
  • Vendor’s signature