What makes an invoice B2B or B2C?
One thing: whether the buyer is registered under GST and gives you their GSTIN (the 15-character GST identification number). Not the size of the order, and not whether the buyer calls itself a business.
| Buyer | Invoice type |
|---|---|
| A business that gives a GSTIN, buying ₹300 of stock | B2B |
| A company with no GSTIN, buying ₹80,000 of uniforms | B2C |
| A consumer, any amount | B2C |
The GST rate does not change with the buyer. A product taxed at 5% is taxed at 5% on both invoices; whether that 5% is split into CGST and SGST (central and state tax) or charged as IGST (integrated tax) depends on the place of supply, not on the buyer's registration.
What must each invoice show?
Rule 46 of the CGST Rules sets the particulars. Most are the same for both: your name, address and GSTIN, a serial number of up to 16 characters, the date, the HSN code (the product's classification code), description, quantity, taxable value, the rate and amount of each tax, and the place of supply. The differences:
| Particular | B2B invoice | B2C invoice |
|---|---|---|
| Buyer's name and address | Always, clause (d) | When the taxable value is ₹50,000 or more, or the buyer asks, clauses (e) and (f) |
| Buyer's GSTIN | Always, clause (d) | None to give |
| Delivery address | When it differs from the place of supply, clause (o) | From ₹50,000, with the state name and code, clause (e) |
| HSN digits, turnover up to ₹5 crore | 4 digits, required | Optional |
| HSN digits, turnover above ₹5 crore | 6 digits | 6 digits |
| E-invoice IRN and QR code | Required once turnover has crossed ₹5 crore in any year since 2017-18 | Not required; a dynamic QR code applies only above ₹500 crore |
| A sale under ₹200 | A full tax invoice | May be covered by one consolidated invoice at the close of the day, if the buyer does not ask for one |
The turnover in the HSN rows is aggregate turnover in the previous financial year (Notification 78/2020-Central Tax). The IRN (invoice reference number) comes from the e-invoice portal; for a business that has to use it, a B2B invoice without one is not treated as an invoice at all (Rule 48(5)). When e-invoicing applies has the detail.
The state still matters on small consumer invoices. For a buyer without a GSTIN, the place of supply follows the address recorded on the invoice, so record at least the delivery state; place of supply for online sales explains why.
How is each reported in GSTR-1?
| Sale | GSTR-1 table | Detail |
|---|---|---|
| B2B, to a registered buyer | Table 4 | Invoice by invoice, against the buyer's GSTIN |
| B2C large: to another state, invoice value above ₹1,00,000 | Table 5 (B2CL) | Invoice by invoice |
| B2C small: every other consumer sale | Table 7 (B2CS) | Totals by state and tax rate |
Rule 59(4) of the CGST Rules sets this split, with the ₹1 lakh line in force from 1 Aug 2024. B2CS vs B2CL has worked examples. Credit notes follow the same line: one on a B2B invoice goes to Table 9B as CDNR (credit note to a registered person), against the buyer's GSTIN.
Why does a business buyer care?
Because the B2B invoice is how it gets its tax back. Section 16(2) of the CGST Act lets a registered buyer claim input tax credit, the GST it paid on purchases, only if it holds your tax invoice and you have reported that invoice in GSTR-1 so it reaches the buyer. Rule 60 delivers it there, in the buyer's monthly GSTR-2B.
A business buying ₹50,000 of goods at 18% pays ₹9,000 of GST. On a B2B invoice reported in Table 4, it claims the ₹9,000. On a B2C invoice, it claims nothing, however correct the rest of the invoice is.
Common mistakes
- A GSTIN typed into the order note. If the invoice does not pick it up, the sale is invoiced and reported as B2C. Collect it in a dedicated field; collecting a GSTIN on Shopify shows how.
- A GSTIN accepted without a check. One wrong character sends the buyer's credit to another business, or to none. The GST portal's Search Taxpayer page shows whether a GSTIN is active and whose it is.
- The GSTIN arriving after the invoice. An issued invoice is not edited to add a buyer. Ask for the GSTIN before payment; if it comes later, talk to your accountant before that month's GSTR-1 is filed.
- The buyer's state left off consumer invoices. Without it, an out-of-state sale can be treated as a sale in your own state.