Bill of supply
Gaurav Yadav

The Bill of Supply, a key document under the Goods and Services Tax (GST) regime, serves as an official record for transactions involving goods or services that are exempt from GST. This article aims to offer an in-depth understanding of the Bill of Supply under GST, its structure, and its significance to small and medium-sized business owners and GST taxpayers.

What is a bill of supply in GST?

A Bill of Supply is a vital document provided by the seller to the buyer when the seller is not permitted to charge GST, or when the transaction type does not incur GST. This implies that a Bill of Supply does not include any tax. It is issued when the registered individual is supplying goods or services that are exempt, or if the individual is registered under the GST composition scheme. 

Contrary to a tax invoice issued for taxable supplies, the Bill of Supply is used for transactions that are not subject to any GST. For small enterprises or those dealing with exempted items, gaining a thorough understanding and proper utilization of the Bill of Supply is crucial to ensure GST compliance.

Who should issue a bill of supply?
The following registrants should issue a Bill of Supply :

bill of supply for registrants
  1. Composition Dealer in GST : 
    A taxpayer with a turnover of less than Rs 1.5 crores (Rs. 75 lakhs for north-east states and Uttarakhand) can opt for the composition scheme under GST. A dealer opting for the composition scheme is required to pay tax on their receipts, and they are not permitted to collect any GST from their buyers. The GST has to be paid by the composition dealer from their own resources. They cannot charge GST on the invoice. Therefore, a composition dealer is required to issue a Bill of Supply instead of a Tax Invoice.
    To learn more about the Composition Scheme under GST, click on the link provided.
  2. Exporters :
    An exporter is also not required to charge GST on their invoice. This is because export supplies are zero-rated. Therefore, a taxpayer exporting goods can issue a Bill of Supply instead of a tax invoice.
    Find out more details on Export of goods and services under GST
  3. Exempted Goods Supplier :
    When a registered dealer supplies exempt goods or services, they are required to issue a Bill of Supply. For instance, when a registered taxpayer provides unprocessed agricultural products, they have to issue a Bill of Supply under GST instead of a tax invoice. GST Input Tax Credit paid on these supplies cannot be claimed by the supplier.

Following are some of the supplies that are considered as the exempted supplies under GST :

  1. Supplies which attract nil rate of GST
  2. Supplies that are either partially or completely exempt from GST, as per the amendments made to Section 11 of the CGST and Section 6 of the IGST through notifications
  3. Supplies that fall under Section 2(78) of the Act, which includes supplies that are not subject to tax under the Act, such as alcoholic beverages for human consumption.

Bill of Supply Format

The format of the Bill of Supply under GST is prescribed by the GST law and contains essential details necessary for maintaining accurate records and facilitating seamless transactions. While the specifics may vary based on individual business requirements, a standard Bill of Supply typically includes the following elements:

Name and Address of the Supplier : The Bill of Supply should clearly mention the name and address of the supplier, providing essential identification details.

Bill of supply details
  1. GSTIN of the Supplier : The GST Identification Number (GSTIN) of the supplier is a unique identifier assigned under GST registration and must be included in the Bill of Supply.
  2. Serial Number and Date of Issue : Each Bill of Supply should be sequentially numbered, along with the date of issue, ensuring proper documentation and tracking of transactions.
  3. Name and Address of the Recipient (if applicable) : If the Bill of Supply is issued to a specific recipient, their name and address should be mentioned.
  4. HSN Code or SAC for Goods or Services : The Harmonized System of Nomenclature (HSN) code for goods or the Service Accounting Code (SAC) for services should be provided to classify the nature of the transaction accurately.
  5. Description of Goods or Services : A detailed description of the goods or services supplied, including quantity, unit price, and total value, must be provided to avoid any ambiguity.
  6. Total Value and Tax Amount (if applicable) : In cases where GST is not applicable, the Bill of Supply should clearly mention that the supply is exempted. If GST is applicable, the total value of the transaction along with the applicable tax amount should be specified.
  7. Declaration : The Bill of Supply in GST should conclude with a declaration stating that the particulars mentioned are true and correct.

Relaxation in Bill of Supply Issuance under GST

  1. Transactions Below Rs.200 : If the value of goods or services, or both, is less than Rs. 200, the issuance of a Bill of Supply is not mandatory.

  2. Digital Signature Not Required : In instances where the Bill of Supply is generated digitally or electronically, there is no need for a physical or digital signature. It’s common to see invoices that include a statement such as “This is a computer-generated invoice and does not require a signature.”
  3. Exemption from Customer Details : Given the high volume of transactions in sectors like banking, insurance, and passenger transportation, taxpayers don't need to maintain the customer's address and serial number.
  4. Presumed Bill of Supply : For non-taxable supplies (like petroleum, and alcoholic liquor), any tax invoice or other documents issued under any other act are considered as a Bill of Supply.
  5. Consolidated Bill of Supply : If the value of goods or services supplied is less than Rs. 1200, a separate Bill of Supply is not required unless requested by the buyer. A consolidated Bill of Supply can be issued at the end of each day for each recipient.
  6. Combined Invoice and Bill of Supply : When a registered person supplies both taxable and exempted goods or services, they can issue a single document known as an 'Invoice cum Bill of Supply'.

Bill of Supply under GST | FAQ's

Is the E-way bill provision applicable to the Bill of Supply in GST?

Yes, it is applicable if the consignment value surpasses Rs. 50,000/-

Is it possible to claim ITC based on the Bill of Supply in GST?

No, the Bill of Supply does not serve as proof for claiming ITC

How does the input tax credit relate to the GST Bill of Supply in GST?

There is no connection as ITC cannot be claimed based on the Bill of Supply

Is it necessary to include the HSN code in the Bill of Supply in GST?

Yes, including the HSN code is mandatory in the Bill of Supply, with certain exceptions

To Conclude…

In essence, the Bill of Supply under GST serves as a vital document for businesses engaged in transactions involving exempted goods or services. By adhering to the prescribed format and understanding its significance, businesses can ensure compliance with GST regulations while maintaining accurate records of their transactions. Whether you're a small business owner or a one-person company, a thorough understanding of the Bill of Supply is essential for smooth GST compliance.

By incorporating the outlined details and insights, businesses can streamline their operations and navigate the complexities of GST with confidence and clarity.

Gaurav Yadav

About the author

Gaurav is an Engineer by training with a deep interest in Economics & Finance. He has been associated with the Fin-Tech industry for quite some time now. He writes for GSTHero for topics including GST Compliance, GST Structure, etc & aims to break down complicated technical jargon into simple terms for the taxpayers.

His expertise includes GST Laws, Corporate Finance & Macro-Economics.

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