Business entities in India are exposed to taxation at state and central levels. The exposure involves Goods and Services Tax (GST) alongside centralized and decentralized invoicing. When a business involves shipping goods outside the country, an export entity is liable to produce additional information. Exporters are accountable to travel beyond the regular intrastate and interstate formalities to present a comprehensive invoice for the customs authority to evaluate the shipment and arrive at the tax and duties applicable on it.
What is an Export Invoice?
An export invoice is an addendum to the contents of a regular tax invoice which further includes details required to conduct an export exercise. For example, an export invoice would include details of the shipment material itself, the entities involved in the export and import exercise, and the funds that the importer is due to pay to the exporter.
Importance of Export Invoices in Trade?
An export invoice is hugely beneficial during verification at various stages and more so to deal with contingency.
The details of the shipment inclusive of the pricing is helpful during verification both at the export and import stages. The accuracy of the invoice helps timely delivery of the shipment to the importer.
An export invoice with cent percent accuracy assists the customs authority and the governments involved to maintain a fair trade record and render transparency.
It serves as a blueprint of the transactions of the trade to keep all stakeholders and players such as the freight carriers and forwarders, customs, insurance providers, and the banks on a common page.
An export invoice bears the assurance that all regulations and legal requirements have been met to avoid all kinds of fines, penalizations, or additional fee.
Most importantly, during any stage of negative impact or a mishap, the details help smoothen the process of insurance claims.
What are the Different Types of Export Invoices?
Broadly, there are 6 kinds of export invoices.
Commercial Invoice for Export
A document that holds legal tender by the customs authority of the export country as well as the country of import for clearance of the shipment is referred to as Commercial Invoice for Export. In lesser measure, one could simply treat it as a bill for trading between the exporter and the importer.
Proforma Invoice for Export
A Proforma Invoice for Export serves as a prelude to the confirmation of the trade. Much like a commercial invoice, a Proforma Invoice is helpful to propose the terms of payment or Letter of Credit and provide an offer to draw business of export from the importer. It helps the importer to evaluate the pricing, risks, and legalities involved prior to the endorsement of the trade.
Consular Invoice for Export
A Consular Invoice for Export is also a commercial invoice. The difference lies in its significance for it bears the approval of the consul of the country of import after thoroughly verifying all specifications of the trade activity. A Consular Invoice has zero tolerance for errors. It is extremely important for the pricing and financial obligations involved in the trade to be accurately mentioned.
Legalized Invoice for Export
A Legalized Invoice for Export is only different to a consular invoice in terms of the format. Its significance is the same as the consular invoice. It is duly attested and endorsed by the consul of the country of import. A Legalized Invoice is more flexible. An interesting aspect is that the document is not legally binding on the importer and exporter until both parties agree to the terms and specifications of the invoice.
Customs Invoice for Export
Some countries such as those in North America provide a standard customs invoice template on the basis of which the exporter provides the specifications of the goods being exported.
Certified Invoice for Export
A Certified Invoice for Export is an important document that an exporter presents to the consular or the chamber of commerce at the country of import. It ascertains that the products are either manufactured or processed from the country of export. While all details of a regular export invoice are necessary, the interesting aspect lies in the assessment that the product being shipped must cost lesser than the price it is available for at the country of import.
How Drip Capital Can Help You?
Drip Capital helps to facilitate trade by providing Export Finance and Invoice Factoring services.
In simple terms, Drip Capital in India assists entities to sell products globally by embracing their problem of funding the long term payment cycle. It is a collateral-free engagement as a result of which small enterprises dare to become as ambitious as the large players.
The Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, Department of Commerce, Government of India is the authority that regulates export trade in India. The DGFT announces amendments in the policies and procedures pertaining to the export trade from India as and when necessary.
Also Read: Difference between Proforma Invoice and Commercial invoice
Export rules, regulations, and laws in India are open and flexible. As per the RBI, invoicing of export contracts in Indian National Rupee (INR) is unrestricted with respect to regulations, rules, directions, and notifications drafted under the Foreign Exchange Management Act 1999.
The Government of India encourages export trade and helps to make the process seamless. It is for the traders to ensure transparency through documentation such as export invoice, which ascertains the authenticity of the trade activity being conducted by a legitimate entity.
FAQs
How many types of export invoices are there?
There are 6 broad categories of export invoices, usage of which depends on the acceptance and protocols of both the import and export countries involved in the trade.
- Commercial Invoice for Export
- Proforma Invoice for Export
- Consular Invoice for Export
- Legalized Invoice for Export
- Customs Invoice for Export
- Certified Invoice for Export
What is a 3-way invoice?
A 3-way invoice is an Accounts Payable (AP) process requirement which checks the authenticity of the supplier invoice and whether it stands clear to be paid.
There are 3 documents that are considered for assessment.
Purchase Order: This has a unique number used for tracking and referring to the details of the purchase agreed upon by the seller and the buyer.
Delivery Receipt: This is also called receiving report which is an assurance that the product was delivered.
Supplier’s Invoice: This consists of the invoice number and the dues that the buyer owes to the supplier.
What is 6A export invoices?
6A export invoices are export invoices with details of GST levied on the trade activity. These allow an entity or dealer to claim returns pertaining to the GST levied on the export trade.
When to raise an export invoice?
An export invoice can be raised prior to or at the time of the removal of the shipment for export.
Is e-invoicing mandatory for exports?
Yes, e-invoicing is mandatory for exports as it allows declaration of zero-rated supplies and export invoices.
On the other hand, e-invoicing is not applicable for import transactions.
