Bill of supply under GST
A quick overview of a bill of supply under the GST
What is a Bill of Supply?
A GST-registered business issues a tax invoice to the buyer, including the GST rate imposed on the products and services sold. However, some GST-registered businesses have no right to charge tax on their invoices. These companies must instead issue a Bill of Supply. A Bill of Supply is used when GST does not apply to a transaction or when GST is not to be collected from customers.
Who Needs to Issue Bill of Supply
Composition Dealer
A taxpayer with a revenue of less than Rs 1.5 crores* (Rs. 75 lakhs for north-east states and Uttarakhand) can use the composition scheme. Under this scheme, the dealer must pay the tax and cannot collect it from the buyer. The dealer pays GST out of pocket; thus, they cannot charge it on the invoice. Instead, they distribute a Bill of Supply. The term ‘composition taxable person not eligible to collect taxes on supplies’ must be included on the bill of supply.
Exporters Exempted
An exporter is also not required to include GST on their invoices. This is because export supplies are zero-rated. As a result, a taxpayer exporting goods can issue a Bill of Supply rather than a tax invoice. The dealer must include the following in their bill of supply: “Supply Meant For Export On Payment Of IGST” and “Supply Meant For Export Under Bond Or Letter Of Undertaking Without Payment Of IGST.”
Exempted Goods Supplier
A registered dealer must issue a Bill of Supply when providing exempt goods or services. For example, when a registered taxpayer provides unprocessed agricultural products, they must provide a Bill of Supply rather than a tax invoice.
Bill of supply format
A Bill of Supply has a specified format and contains important details required by GST regulations.
Here’s what it usually has:
- Supplier information, such as name, address, and GSTIN.
- A unique Bill of Supply number is used to identify each document.
- Date of Issue
- If you are registered for GST, include the recipient’s information.
- A comprehensive description of goods or services.
- The value of products or services after discounts.
- Supplier signature or digital endorsement.
Differences between Tax Invoice and Bill of Supply
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Tax Invoice |
Bill of supply |
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It is issued when there is a taxable supply. |
It is issued when the supply is exempt. |
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Input Tax Credit can be given on the basis of a Tax Invoice. |
Input tax credit cannot be claimed based on a bill of supplies. |
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On the Tax Invoice, the amount and rate of tax are mentioned. |
The amount and rate of tax are not mentioned on the bill of supply. |
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A composition dealer cannot issue a tax invoice. |
Composition dealer issues A bill of supply. |
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If the recipient is unregistered and the value of the supply exceeds Rs. 50,000, the invoice must include the following information:
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No such information is necessary in case of a bill of supply. |
Significance of the Bill of Supply
Bills of Supply are extremely important for businesses in India because they are required for GST compliance. These documents are necessary for keeping complete records of transactions that do not have any tax penalties.
Here’s what makes them necessary:
- GST Compliance: Bills of Supply ensure that firms comply with the GST framework by accurately recording exempt transactions or those falling under the composition scheme.
- Avoidance of Penalties: Proper documentation, such as Bills of Supply, can help companies avoid penalties for noncompliance with GST guidelines.
- Operational Efficiency: Bills of Supply improve operational efficiency by giving a clear record of sales transactions, which helps with revenue tracking, inventory management, and account reconciliation.
- Legal Protection: These documents provide legal protection by serving as proof in a dispute helping businesses resolve problems with customers and suppliers.
- Transparent Business Practices: Issuing Bills of Supply shows transparency and dedication to regulatory obligations, which increases stakeholder trust.
Bills of Supply are important tools for companies operating under the GST framework in India. They maintain compliance, promote operational efficiency, provide legal protection, and encourage transparent corporate practices, all of which contribute to growth and sustainability in today’s dynamic business environment.
Our blog post on the Bill of Supply under GST is now complete. Let us know if you have further concerns or questions in the comment section below.
FAQs
1. Is HSN code required for a bill of supply?
Ans: HSN is necessary for bills of supply, with some exceptions.
2. What is the relationship between an input tax credit and the GST bill of supply?
Ans: There is no relation because we cannot claim ITC based on the bill of supply.
3. Can we claim ITC based on the Bill of Supply?
Ans: No, a bill of supply is not sufficient evidence to claim ITC.
4. Does the E-way bill provision apply to Bills of Supply?
Ans: Yes, If the value of the consignment exceeds Rs. 50,000/-.
