Running a business in India means navigating a maze of billing terms and compliance rules. Whether you’re a manufacturer, trader, or service provider, knowing the exact meaning of each billing term can save you from compliance headaches and costly mistakes.

In this guide, we break down the most important Indian billing terminology you’ll encounter, especially under the Goods and Services Tax (GST) regime.

1. Invoice

An invoice is a legal document issued by a seller to a buyer, recording the sale of goods or services.
It must include details such as:

Invoice number
Date of issue
GSTIN of both parties
Description of goods/services
Taxable value and GST rates

Under GST, there are two main types:

Tax Invoice – when GST is applicable.
Bill of Supply – when GST is not applicable (e.g., exempt goods/services).

📚 Related: How to Create GST-Compliant Invoices in India

2. Delivery Challan

A delivery challan is a document accompanying goods during transportation when no sale has occurred yet.
Common use cases:

Sending goods for job work
Transporting goods on approval basis
Delivering goods where quantity is unknown at the time of removal

Unlike an invoice, a delivery challan does not demand payment.

🔗 More: Delivery Challan vs Invoice

3. Credit Note

A credit note is issued by the seller to the buyer to reduce the value of an invoice.
Typical reasons:

Goods returned
Overcharging
Post-sale discount

As per GST rules, the credit note must be reported in GST returns for adjustment.

4. Debit Note

A debit note is issued when the seller needs to increase the amount payable by the buyer for an invoice.
Common scenarios:

Undercharging in the original invoice
Additional costs incurred after invoicing

5. E-Invoicing

E-invoicing is the process of electronically authenticating invoices through the Invoice Registration Portal (IRP) under GST.
Mandatory for businesses with turnover above specified thresholds (currently ₹5 crore from August 2023).

6. GSTIN

The GST Identification Number (GSTIN) is a 15-digit unique number assigned to every GST-registered taxpayer. It’s mandatory on all invoices, challans, and returns.

Why This Matters for Your Business

Using the correct billing document ensures:

GST compliance
Smooth audits
Faster payment cycles
Reduced disputes with customers

FAQ: Indian Billing Terminology

Q1. Is a delivery challan a substitute for an invoice?
No. A delivery challan is used when goods are transported without sale. An invoice is used when a sale occurs and payment is due.

Q2. Can I issue an invoice without GST?
Yes, if your business is not registered under GST or you deal in exempt goods/services, you must issue a Bill of Supply instead.

Q3. How long should I keep billing records under GST?
As per Section 36 of the CGST Act, records must be retained for 72 months from the due date of the annual return.

External References:

Key Indian Billing Terminology Explained for Business Owners