When do I issue the invoice for a COD order?
The same as for any sale of goods: before or at the time the goods are removed for delivery (section 31 of the CGST Act). The payment method does not change it. Two common choices both meet the rule:
| Issue the invoice | Good for | Cost |
|---|---|---|
| When the order is placed | Every order has its invoice at once; the customer can be emailed it | An order cancelled before dispatch needs a credit note |
| When the order is dispatched | Fewer credit notes for orders cancelled before shipping | Orders waiting to ship have no invoice yet |
When is the GST due on a COD order?
When the invoice is issued, not when the cash arrives. For goods, the time of supply is the date of the invoice, or the last date by which it should have been issued if earlier (section 12). A COD order invoiced on 28 October is October's sale: it goes in October's GSTR-1 and its tax is paid with October's GSTR-3B, even if the courier remits the cash in November.
What do I do when a COD parcel comes back (RTO)?
Return to origin, when the customer refuses the parcel or cannot be reached, is the most common way a COD order ends. If the invoice was already issued, the sale is still in your books until you reverse it:
- Cancel the order in Shopify (or record the return).
- Issue a credit note against the invoice for the full value. Goods returned by the recipient is one of the grounds in section 34.
- The credit note goes in the GSTR-1 of the month you issue it, and reduces that month's tax.
Do this every month. RTO credit notes left undone pile up as sales that never happened, and you pay GST on them. A credit note must be declared by 30 November after the end of the financial year of the sale, or the date you file that year's annual return, if earlier.
What if the customer takes some items and refuses others?
Issue a credit note for the refused items only. The invoice stays for what was accepted.
Is a COD fee taxable?
Yes. A fee for cash on delivery, charged to the customer with the goods, is part of the value of the goods (section 15(2)(c) includes incidental expenses and anything done by the supplier at or before delivery). It is taxed at the goods' rate and goes on the same invoice, not as a separate 18% service.
What about the courier's COD and RTO charges?
They are the courier's services to you, billed with GST, usually 18%: a COD collection or remittance charge, forward and RTO freight. That GST is input tax credit, as long as the invoice carries your GSTIN and appears in your GSTR-2B. The COD amount the courier remits to you is your own sale proceeds, not a new supply.
Does COD change anything else?
No. The place of supply is still the delivery address; the ₹1 lakh B2CL rule and the ₹2,500 clothing rule apply the same way; and a buyer with a GSTIN still gets a B2B invoice.