Dervo
Your invoice is not just a request for payment. It is a tax document your client depends on to claim input tax credit. These are the mistakes we see most often in small service businesses, and how to avoid them.
1. Invoice numbers that break the rules
Invoice numbers must be in a consecutive series, unique within a financial year, and no longer than 16 characters. A prefix like DG/INV/26-27/001 works. A long one like DERVO-GLOBAL-INV-2026-27-0001 does not.
Tip: start a new series every financial year and never reuse or skip numbers casually. Cancel an invoice instead of deleting it.
2. Wrong place of supply
Place of supply decides whether you charge CGST and SGST (same state) or IGST (different state). Charging the wrong one means paying the correct tax again and then claiming a refund of the wrong one.
Tip: check the client's state, and the state code in their GSTIN, before raising the first invoice.
3. Missing or wrong client GSTIN
For a registered business client, a missing or wrong GSTIN means the invoice does not appear correctly for them, and they cannot claim the input tax credit. Expect a delayed payment and a request to reissue.
Tip: copy the GSTIN from the client's registration certificate or verify it on the GST portal. Do not retype it from an email signature.
4. Missing SAC or HSN codes
Invoices must show the SAC code for services (HSN for goods). Businesses with turnover up to ₹5 crore must show at least 4 digits on invoices to registered clients; above ₹5 crore, 6 digits.
Tip: save the correct code with each service you sell, so it fills in automatically.
5. Invoicing services too late
For services, the invoice should generally be issued within 30 days of providing the service. Late invoices can create mismatches between when tax is due and when it is reported.
Tip: for monthly retainers and time-and-material work, raise invoices on a fixed date every month.
6. Exporting services without an LUT
Services to clients outside India can be zero-rated. With a Letter of Undertaking (LUT) you invoice without charging IGST. Without one, you must pay IGST and then claim a refund, which ties up cash for months. The LUT must be filed on the GST portal for each financial year, and the invoice should say the supply is for export under LUT without payment of IGST.
Tip: file the LUT at the start of every financial year, before the first export invoice.
7. Credit notes issued late or not reported
If you reduce an invoice value, issue a credit note that refers to the original invoice. Credit notes for a financial year must be reported by 30 November of the following year (or the annual return date, if earlier). After that, you cannot reduce the tax you already paid.
Tip: settle disputes and discounts before year-end, and issue the credit note as soon as they are agreed.
One more: check your GSTR-1 against your books
Before filing GSTR-1, match the total of your invoices and credit notes for the month against your accounts. Most notices start with a mismatch nobody noticed.
When e-invoicing applies
If your aggregate turnover crosses ₹5 crore in any financial year from 2017-18 onwards, you must generate e-invoices (IRN) for business clients. Most small businesses are below this limit, but watch it as you grow.
How Dervo CRM helps
Dervo CRM limits invoice numbers to 16 characters, picks CGST/SGST or IGST from the place of supply, saves SAC codes with your services, adds the LUT wording on export invoices, links credit notes to invoices and exports GSTR-1 for your CA. Try the live demo.
