Bill Of Supply Under GST In India

Under the GST regime, businesses are generally required to issue a tax invoice when supplying taxable goods or services. However, there are specific situations where a tax invoice cannot be issued. Instead, the seller must issue a bill of supply under GST. This document serves as proof of a tax-free transaction and is particularly relevant for businesses operating under the composition scheme or dealing with exempt supplies.

This article explains the bill of supply meaning in GST, its format, when it is required, how it differs from a tax invoice, and the key rules under GST, including section 31 of the CGST Act and invoicing rules under GST.

Bill Of Supply Meaning In GST?

A bill of supply is a document issued by a GST-registered supplier when GST is not applicable or cannot be charged on the transaction. It is primarily used in the following cases:

• The supplier is dealing in exempted goods or services
• The supplier is registered under the composition scheme and cannot collect GST from the buyer
• Exporters supplying goods or services on a zero–rated basis

Since GST is not charged, a bill of supply does not show any tax amount. It simply acts as evidence of a tax-exempt supply and confirms that the supplier has not collected any GST from the buyer.

When is a Bill of Supply Required?

A bill of supply is issued in the following situations:

1. Composition Dealer

A taxpayer whose turnover is less than Rs. 1.5 crores (Rs. 75 lakhs for North-East states and Uttarakhand) may opt for the composition scheme. Under this scheme, the taxpayer pays GST from their own pocket and cannot charge GST to the customer. Therefore, a composition dealer must issue a bill of supply instead of a tax invoice. The bill must also contain the statement:
“composition taxable person not eligible to collect taxes on supplies”.

2. Exporters

Exports are zero–rated under GST. This means exporters do not charge GST on invoices. For such supplies, a bill of supply can be issued with the appropriate mention, such as:

• “Supply Meant for Export on Payment of IGST”
• “Supply Meant for Export Under Bond or Letter of Undertaking Without Payment of IGST”

3. Suppliers of Exempted Goods or Services

If a registered supplier deals in exempt goods or services, they must issue a bill of supply instead of a tax invoice. For example, unprocessed agricultural products fall under exempt supplies and require a bill of supply.

Bill of Supply vs Tax Invoice Under GST

Understanding the difference between a bill of supply vs tax invoice under GST is essential for compliance:

Feature	Tax Invoice	Bill of Supply
GST Charged	Yes	No
ITC Claimable by Buyer	Yes	No
Issued by Composition Dealers	No	Yes
Issued for Exempt Supplies	No	Yes
Contains Tax Details	Yes	No

A tax invoice is used for taxable supplies where GST is charged, and the buyer can claim Input Tax Credit (ITC). On the other hand, a bill of supply is used when GST is not charged, and ITC is not available.

Bill of Supply Format Under GST

A bill of supply must contain the following details:

• Supplier’s name, address, and GSTIN
• Bill of Supply number (consecutive and unique within the financial year; not exceeding 16 characters)
• Date of issue
• Recipient’s name, address, and GSTIN (if registered)
• HSN code for goods or accounting code for services
• Description of goods or services
• Value after discount or rebate
• Signature or digital signature of the supplier

The number of HSN digits required depends on turnover in the previous financial year:

• Turnover less than 1.5 crores: HSN code not required
• Turnover between 1.5 – 5 crores: 2-digit HSN code
• Turnover above 5 crores: 4-digit HSN code

For businesses seeking an easier way to generate compliant bills of supply, TMWala offers a simple GST invoicing solution that helps create accurate bills in minutes.

Bill of Supply Format For Composition Dealer

For composition dealers, the bill of supply format under the GST composition scheme is similar to the regular bill of supply but must include a specific statement indicating the dealer’s status. This ensures that buyers are aware that GST is not being charged.

A composition dealer must include the statement: “composition taxable person not eligible to collect taxes on supplies.”

This declaration is mandatory to avoid any confusion and maintain compliance.

Invoicing Rules Under GST (Section 31 of CGST Act)

The key legal provisions for issuing invoices are outlined under Section 31 of the CGST Act. According to this section:

• A tax invoice must be issued for taxable goods or services
• A bill of supply must be issued in cases of exempt supplies or for composition dealers
• Invoice details must be provided at the time of supply or within the prescribed time
• If the supply value is less than Rs. 200, no tax invoice is required in certain cases
• A revised invoice may be issued within one month of registration if needed

The GST law also provides detailed rules for issuing bills of supply, including the format and required contents.

Read more here: Goods & Service Tax, CBIC, Government of India:: Tax Invoice, Credit and Debit Notes

Conclusion

In conclusion, a bill of supply under GST is an essential document for transactions where GST is not applicable or cannot be collected, such as supplies by composition dealers, exporters, and providers of exempt goods or services. Unlike a tax invoice, it does not show tax details or enable the buyer to claim Input Tax Credit, making it a distinct and important component of GST compliance.

Understanding the bill of supply meaning in GST, its format, and the differences between bill of supply vs tax invoice under GST is crucial for businesses to ensure accurate invoicing and avoid legal penalties. The bill of supply format under the GST composition scheme requires specific declarations, especially for composition dealers, and must adhere to the prescribed details such as GSTIN, HSN codes, and consecutive numbering.

The invoicing requirements under GST, as laid out in Section 31 of the CGST Act, provide clear guidance on when and how invoices and bills of supply must be issued. By following the invoicing rules under GST, businesses can maintain transparency, streamline accounting, and stay compliant with GST regulations.

For businesses seeking a simplified and reliable way to generate accurate bills of supply, TMWala offers efficient GST invoicing solutions that can help automate the process and ensure compliance with the latest GST norms.

FAQs

1. What is a bill of supply under GST?
   A bill of supply under GST is a document issued when GST is not applicable or cannot be charged on a transaction, such as in exempt supplies or by composition dealers.
2. What is the bill of supply in GST?
   It is a tax–free invoice issued by a GST-registered supplier to prove that no GST was charged on the supply of goods or services.
3. When is a bill of supply required?
   A bill of supply is required when supplies are exempt, when the supplier is under the composition scheme, or when exports are zero–rated.
4. What is the difference between a bill of supply and a tax invoice under GST?
   A tax invoice includes GST and allows ITC, while a bill of supply does not include GST, and ITC cannot be claimed.
5. What details are required in a bill of supply format under GST?
   It must include supplier details, bill number, date, recipient details (if registered), HSN/Accounting code, description, value, and signature.
6. Is the HSN code required in the bill of supply?
   HSN code is required based on turnover:
   • Less than 1.5 crores: Not required
   • 1.5–5 crores: 2 digits
   • Above 5 crores: 4 digits
7. What is the bill of supply format for a composition dealer?
   A composition dealer must issue a bill of supply with the statement: “composition taxable person not eligible to collect taxes on supplies”.
8. What are the invoicing rules under GST?
   The invoicing rules under GST, under section 31 of the CGST Act, require issuing a tax invoice for taxable supplies and a bill of supply for exempt supplies or composition dealers.
9. When can a revised invoice be issued?
   A revised invoice may be issued within one month of registration if required.
10. What is the purpose of a bill of supply?
    The purpose is to provide proof of a tax-free supply and ensure compliance when GST cannot be charged or collected.