Bill of Supply

What is a bill of supply?

A bill of supply is a document issued by a GST-registered business instead of a tax invoice, in cases where taxes cannot be charged on the goods or services sold. It is used by composition vendors and businesses dealing with exempted goods. The tax details are not required to be included in a bill of supply, so the issuer will not be eligible to claim any ITC.

What is the difference between a tax invoice and a bill of supply?

A tax invoice is used for all types of local and central taxable sales. It includes the GST tax rates and corresponding tax amounts for the goods and services sold, and mentions the reverse charge for the transaction, if any.

A bill of supply is used for all local and central exempt sales, and sales made by a composition dealer. As a bill of supply is for non-taxable goods, it does not include any tax rates.

What is the composition scheme?

The composition scheme is a GST initiative for small businesses with an aggregate turnover of less than Rs. 1.5 crore (less than 75 lakhs for North-Eastern states). The business owners registered under this scheme, called composition vendors, are dealers who pay less tax and have fewer returns to file than most taxpayers. The composition scheme can only be used for local sales within a state.

What does a bill of supply contain?

A bill of supply contains the following details: 

• The name, address and GSTIN of the supplier 
• A consecutive serial number, in one or multiple series, containing letters, numbers or special characters in a unique combination 
• The date of issue 
• The name, address, and GSTIN or UIN, if registered, of the recipient 
• The Harmonized System of Nomenclature (HSN) Code for goods or Accounting Code for Services 
• A description of the goods and/or services
• The value of supply of goods and/or services, taking into account any discounts or abatements
• Signature or digital signature of the supplier or their authorised representative 

When is a bill of supply issued?

A bill of supply is issued when a business sells goods and services that are classified as exempt from GST, or in cases where a business is registered under the composition scheme. 

When is a bill of supply not required?

A bill of supply need not be issued if the value of the goods or services supplied is less than Rs. 100, unless the customer specifically asks for a bill.

However, a consolidated bill of supply must be prepared by the registered taxable person at the end of each day, covering all supplies where an individual bill of supply was not issued.