Guide to Bill of Supply Under GST
- A Bill of Supply is used by businesses for exempt goods or services or under the GST composition scheme, instead of a tax invoice.
- It is issued when selling exempt goods/services, by composition scheme dealers, or for zerorated exports.
- Unlike a tax invoice, a Bill of Supply does not include GST charges, and no input tax credit can be claimed.
- Essential details in a Bill of Supply include supplier and recipient information, date, and a description of goods/services.
- Businesses must issue a Bill of Supply to comply with GST laws and avoid penalties.
A bill of supply is a document issued by a supplier of goods or services instead of a tax invoice. It is a simpler version of the tax invoice and includes no tax components. The bill of supply in GST is issued by businesses that fall under the composition scheme or businesses that supply exempted goods or services.
The main purpose of a bill of supply is to keep track of the supplier’s sales and maintain proper accounting records. In this way, the bill of supply helps the supplier to comply with the GST regulations without having to go through the process of issuing a tax invoice. This article will comprehensively explain what is a bill of supply, its purpose, and the eligible businesses to issue it.
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Who should issue the bill of supply, and when should it be issued?
A business typically issues a bill of supply when selling goods and services exempt from GST. For instance, a fruit vendor would not issue a regular tax invoice but instead raise a supply bill for their customers.
Moreover, if a business is registered under the Composition scheme, it should only issue a bill of supply to its customers and not tax invoices since it cannot charge GST on its sales transactions.
A Bill of Supply is issued in case of:
Supplier of exempted goods or services: Any registered taxable person who supplies exempt goods or services must issue a bill of supply.
Composition Dealer: Any taxpayer registered under the composition scheme can also issue a bill of supply since they cannot claim an Input Tax Credit on the supplied goods or services.
Exporter: Taxpayers who export goods or services can also issue a bill of supply since export is considered a zero-rated supply under GST. When exporting, the following details must be included:
- Recipient’s name
- Recipient’s address
- Name of the country, address, and pin code where the goods will be exported.
Difference Between Tax Invoice and Bill of Supply
Under GST, a Tax Invoice is issued when a business sells taxable goods or services. It includes GST details like rate, tax amount, and allows the buyer to claim Input Tax Credit (ITC).
On the other hand, a Bill of Supply is issued for non-taxable or exempt supplies, or by businesses under the Composition Scheme. It does not include GST charges, and ITC cannot be claimed on its basis. The key difference lies in tax applicability and ITC eligibility.
| Feature | Tax Invoice | Bill of Supply |
|---|---|---|
| Applicability | For taxable goods or services | For exempted or non-taxable goods/services, or under Composition Scheme |
| GST Charged | Yes, as per applicable GST rate | No GST is charged |
| ITC Eligibility | Buyer can claim Input Tax Credit | No ITC is allowed |
| Invoice Format | Must contain GSTIN, HSN code, tax amount, and rate | Simpler format without GST fields |
| Issued By | Registered regular taxpayers | Composition dealers or those making exempt supplies |
Feature
Tax Invoice
Bill of Supply
Feature
Tax Invoice
Bill of Supply
Feature
Tax Invoice
Bill of Supply
Feature
Tax Invoice
Bill of Supply
Feature
Tax Invoice
Bill of Supply
Bill Of Supply Format Under GST
The supplier shall issue a bill of supply GST containing the following details.
- Trade name, address, and GST identification number of the supplier.
- Consecutively numbers serial numbers, not exceeding 16 characters in one or multiple series, unique for a financial year.
- Date of its issue
- Address, products, and services, trademark. The recipient’s tax identification number or, if registered, unique identity number.
- Harmonized System of Nomenclature code of goods or services.
- Describe the products, services, or both.
- Value of supply of goods, services, or both, considering any discounts or reductions.
- Designation in the form of a signature or digital signature of the supplier or his authorised representative.
Contents of Bill of Supply
The GST law has specified specific particular that should be present in a bill of Supply. These are the details the bills of Supply should have.
- Name, address, and GSTIN of supplier
- Each bill of supply will have a unique number for the financial year that cannot be more than 16 characters and must be generated sequentially.
- Date of Issue
- The recipient’s name, address, and GSTIN are provided if they are registered.
- HSN code for items or a service’s accounting code. Based on turnover in the prior fiscal year, the minimum number of digits that must be provided is as follows:
| Turnover | No. of HSN Digits |
|---|---|
| Less than 1.5 crores | HSN code is not required |
| Between 1.5 – 5 crores | 2-digit HSN code |
| Above 5 crores | Must use a 4-digit HSN code |
Turnover
No. of HSN Digits
Turnover
No. of HSN Digits
Turnover
No. of HSN Digits
- Description of goods/services
- Value of goods/services after adjusting any discount or reduction
- You can easily create and print a GST-compliant bill of Supply with the supplier’s signature or digital signature.
Also Know About: GST Accounting Software
GST Bill of Supply: For a Non-Taxable Supply
A Bill of Supply is used when GST is not applicable to a sale. This applies in the following cases:
- When supplying exempt goods or services
- By businesses registered under the Composition Scheme
- For export of goods or services that are zero-rated under GST
Since no tax is charged on these supplies, a Bill of Supply is issued instead of a Tax Invoice. It helps businesses comply with GST laws without collecting or charging GST on non-taxable transactions.
What are some relaxations for issuing a Bill of Supply?
A value less than Rs. 200: If the value of goods or services is less than Rs. 200, a Bill of Supply is not required to be issued.
Non-requirement of signature or digital signature: When a Bill of Supply is issued digitally or electronically, there is no requirement for a signature or digital signature. Often, invoices may carry a statement such as “This invoice is generated on a computer. This does not require a signature.
Relaxation for serial number and address of customer: Taxpayers in the banking, insurance, and passenger transportation sectors need not maintain the address of the customer and serial number due to many transactions.
Deemed Bill of Supply: In the case of non-taxable supply, such as petroleum or alcoholic liquor, a tax invoice or other document issued under any other act shall be considered a Bill of Supply.
Consolidated Bill of Supply: When the value of goods or services supplied is less than Rs. 1200, a separate Bill of Supply is not required if the buyer does not demand it. A consolidated Bill of Supply can be issued separately at the end of each day to each recipient.
Invoice-cum-bill of supply: When a registered person supplies both taxable and exempted goods or services, they can issue a single ‘Invoice cum Bill of Supply’.
Relaxation in HSN Code or SAC: HSN code is an 8-digit code, while SAC is a 6-digit code, and their use is relaxed.
Creating a New Bill of Supply
A Bill of Supply is issued by GST-registered businesses for exempt goods or services or if they are under the composition scheme. Unlike tax invoices, it doesn’t include tax details. To create one, start by accessing your accounting software or billing portal, select “Bill of Supply,” and enter customer, item, and pricing details. Review all information, save, and issue the document to your customer. This helps maintain compliant and transparent transaction records under GST.
Bill of Supply and GSTR Reports
A Bill of Supply does not include tax details and is used when selling exempt goods/services or under the GST composition scheme . It’s essential for preparing accurate GSTR reports, as exempt or composition transactions must be filed differently from taxable ones. When creating a Bill of Supply, ensure that all entries align with GSTR requirements to maintain accurate records and ease compliance. Regular GSTR reporting with correct Bills of Supply helps avoid errors and penalties.
Conclusion
Now, you may have understood the bill of supply meaning and why it is an essential document that businesses must issue when supplying exempted goods or services or registering under the composition scheme. It is considered proof of transaction and includes important details such as the recipient’s name and address, the transaction’s date, and the value of the goods or services supplied. Businesses must ensure they issue the bill of supply complying with the guidelines under the GST laws to avoid penalties and legal consequences.
