Key takeaways
What this article covers, in order:
- Why does it matter whether the buyer is registered?
- So where does each sale go?
- What details does each section need?
- How are credit notes handled differently?
- What if a customer gets their GSTIN late?
- Mistakes that show up in your buyer's inbox
Sunita sells handmade furniture from Jaipur. In one week she invoices a registered hotel in Udaipur, a walk-in customer from the showroom, and a home buyer in Delhi who orders a ₹1,40,000 dining set. Three sales, three different places in GSTR-1. B2B sales (buyer has a GSTIN) are reported invoice by invoice in Table 4. B2C sales to unregistered buyers are split by size and route: inter-state invoices above ₹1 lakh go invoice-wise in Table 5 (B2C Large), and everything else goes in Table 7 (B2C Small) as a state-wise, rate-wise summary.
The split isn't paperwork for its own sake. It decides whose GSTR-2B your invoice lands in, and whether your buyer gets credit.
Why does it matter whether the buyer is registered?
A registered buyer can claim input tax credit on what they buy from you. They can only do that if your invoice shows up in their GSTR-2B, and it only shows up there if you've reported it in the B2B section with their GSTIN.
Report a B2B sale as B2C by mistake and the tax still reaches the government, so you might think no harm done. But your customer's credit vanishes. You'll hear about it.
Unregistered buyers can't claim ITC, so the portal doesn't need invoice-level detail for most of them. A summary is enough. The exception is large inter-state sales, which the government wants to track individually.
So where does each sale go?
| Type of sale | Buyer | Value and route | GSTR-1 table | Detail level |
|---|---|---|---|---|
| B2B | Registered (has GSTIN) | Any value, any route | 4A (4B if reverse charge) | Invoice-wise |
| B2C Large (B2CL) | Unregistered | Inter-state, invoice value above ₹1 lakh | 5 | Invoice-wise |
| B2C Small (B2CS) | Unregistered | Intra-state any value, or inter-state up to ₹1 lakh | 7 | Summary by state and rate |
| Exports | Overseas | Any | 6A | Invoice-wise |
| Supplies to SEZ / deemed exports | Registered | Any | 6B / 6C | Invoice-wise |
The B2CL threshold used to be ₹2.5 lakh. It came down to ₹1 lakh from 1 Aug 2024, and the portal caught up a little later. If an old Excel template still says ₹2.5 lakh, throw it out.
Back to Sunita. The Udaipur hotel invoice goes in Table 4A with the hotel's GSTIN; it's intra-state (Rajasthan to Rajasthan), so CGST plus SGST. The showroom walk-in goes in Table 7 as part of the Rajasthan summary. The Delhi dining set is inter-state, unregistered, and above ₹1 lakh, so it's B2CL in Table 5 with the invoice number, date, value and place of supply (Delhi). Had that dining set been ₹95,000, it would have dropped into Table 7 instead, summarised under place of supply Delhi.
What details does each section need?
For B2B, every invoice needs the buyer's GSTIN, invoice number, date, invoice value, place of supply, whether reverse charge applies, invoice type (regular, SEZ, deemed export), and the rate-wise taxable value and tax.
For B2CL, it's the invoice number, date, value, place of supply, rate and taxable value. No GSTIN, obviously.
For B2CS, you don't list invoices at all. You report total taxable value and tax for each combination of place of supply and rate. So "Rajasthan, 18%, ₹3,40,000" might be one line covering forty bills.
How are credit notes handled differently?
This is where the B2B and B2C split carries forward.
Credit and debit notes to registered buyers go in Table 9B as CDNR (credit/debit notes, registered). They hit your buyer's GSTR-2B just like the original invoice, and with IMS the buyer gets to accept or reject them.
Credit notes to unregistered buyers go in Table 9B as CDNUR only if the original invoice was B2CL or an export. For B2CS sales there's no separate note entry. You simply net the reduction into that month's Table 7 summary for the same state and rate.
So if a walk-in customer returns a ₹6,000 chair, Sunita reduces her Rajasthan 18% B2CS figure for the month by ₹6,000. If the Delhi buyer returns the dining set, she issues a credit note against the B2CL invoice and reports it as CDNUR.
What if a customer gets their GSTIN late?
It happens all the time. A contractor buys material in Sep 2026, gets registered in Oct 2026, and asks you to "put the GSTIN on the old bills".
If the invoice was raised before they were registered, it was correctly a B2C sale at the time. Generally you don't convert it into a B2B invoice after the fact. If they were already registered and just forgot to tell you, you can amend the invoice in a later GSTR-1 (Table 9A) to add the GSTIN, within the time limit for amendments. If you're still before filing GSTR-3B for that same month, GSTR-1A is the cleaner route. When in doubt on this one, check with your CA, because it affects their credit and your records.
Mistakes that show up in your buyer's inbox
The most common is a typo in the GSTIN. One wrong character and the invoice lands in someone else's GSTR-2B, or bounces as invalid. Validate GSTINs on the portal when you add a customer, not when you file.
Next is the B2B sale reported in B2CS because the salesperson didn't capture the GSTIN at billing. Train the counter: "GST number, sir?" before printing.
Then there's using the old ₹2.5 lakh B2CL limit, getting place of supply wrong on B2CS lines (reporting everything under your own state), and netting a B2B credit note into the B2C summary instead of filing it as CDNR.
A monthly B2B/B2C check
- [ ] Every customer with a GSTIN has it on their invoices
- [ ] All registered-buyer invoices are in Table 4 with the correct GSTIN
- [ ] Inter-state unregistered invoices above ₹1 lakh are in Table 5
- [ ] Table 7 is split by place of supply and rate, not lumped under your home state
- [ ] Credit notes to registered buyers are reported as CDNR
- [ ] B2CS returns are netted into Table 7
- [ ] Your totals by section add up to your sales register
How HelloBooks helps
HelloBooks looks at the customer's GSTIN and place of supply on each invoice, so it knows which GSTR-1 section the sale belongs in. You don't sort B2B, B2CL and B2CS by hand. Credit notes are linked to the original invoice, so they follow it into the right place. When you're ready, you file GSTR-1 directly to the GST portal from inside HelloBooks on the Free plan for one GSTIN. More on the GSTR-1 filing page and the free GST billing software page.
FAQs
Is an intra-state sale of ₹3 lakh to an unregistered buyer B2CL?
No. B2CL only covers inter-state sales above ₹1 lakh. An intra-state sale to an unregistered buyer is B2CS whatever the value.
Does the ₹1 lakh limit apply to taxable value or invoice value?
It's the invoice value, including tax.
Do I report B2C sales invoice-wise if I want to?
Not in Table 7. B2CS is a summary by place of supply and rate. Keep the individual invoices in your books in case anyone asks.
My customer is a registered composition dealer. B2B or B2C?
B2B. They have a GSTIN, so report it in Table 4. They can't claim ITC, but the invoice still belongs in the B2B section.
What's the place of supply for a B2CS sale at my shop?
For goods sold over the counter, it's generally your state, since delivery happens there. For goods shipped to the customer, it's where the goods are delivered.
Capture the GSTIN at billing time and most of GSTR-1 sorts itself out.
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