Invoices are an important instrument used in daily operations of the business which acts as an evidence of the transaction. In general, there are two types of invoices – tax and retail. Tax invoice may be understood as the invoice issued by one registered vendor to another, during sales. Conversely, a retail invoice also known as sale invoice is issued, the sale is made to the final consumer.
Definition of Tax Invoice
A legal document issued by a registered dealer (seller) in the event of a sale, to another registered dealer (purchaser), who is not the consumer, is known as a tax invoice. The invoice should be created in triplicate i.e. original for the buyer, and the seller retains the rest two.
Tax invoice plays a significant role in any country’s tax system as the dealer’s issue invoices, for recognizing a transaction. At the end of the financial year, they had to submit the details of these invoices to the relevant tax authorities. So, this is an important tool used by the government to avoid tax evasion.
The tax invoice may consist of the following details:
Date of issue of the invoice.
Name and address of the seller
Name and Address of the buyer
Tax Identification Number (TIN)
Signature of authorized signatory
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