Understanding the GST Bill of Supply
Under the GST framework, certain registered businesses, such as composition scheme dealers, exporters, and suppliers of exempted goods, are mandated to issue a Bill of Supply instead of a tax invoice. This document is used when GST is not applicable or cannot be collected from the customer. It must contain specific details like supplier and recipient information, a unique document number, date, description of goods/services, and HSN codes based on turnover.
A business registered under the Goods and Services Tax (GST) system typically issues a tax invoice to customers, detailing the GST applied to the sold goods or services. However, certain businesses registered under GST are not permitted to collect tax from their buyers and must instead issue a Bill of Supply. This document is required when a transaction is exempt from GST or when the tax cannot be recovered from the customer.
Entities Required to Issue a Bill of Supply
The following registered entities are obligated to issue a Bill of Supply:
Composition Scheme Dealers
Taxpayers with an annual turnover below Rs 1.5 crores (or Rs 75 lakhs for North-Eastern states and Uttarakhand) are eligible to opt for the composition scheme. Dealers under this scheme are responsible for depositing tax on their own receipts and are prohibited from charging tax to their buyers. The GST liability must be borne by the composition dealer themselves, rather than being included in the invoice. Consequently, composition dealers must generate a Bill of Supply instead of a Tax Invoice. It is mandatory for composition dealers to explicitly state "composition taxable person not eligible to collect taxes on supplies" on their Bill of Supply.
Note: The Central Board of Indirect Taxes and Customs (CBIC) increased this threshold limit to Rs 1.5 crores, effective from April 1, 2019.
Exporters
Exporters are also exempt from charging GST on their invoices because export supplies are considered zero-rated. Therefore, a taxpayer engaged in exporting goods can issue a Bill of Supply in place of a tax invoice. Exporters must include one of the following declarations on their Bill of Supply: "Supply Meant For Export On Payment Of IGST" or "Supply Meant For Export Under Bond Or Letter Of Undertaking Without Payment Of IGST."
Suppliers of Exempted Goods
When a registered dealer provides exempt goods or services, they are required to issue a Bill of Supply. For example, a registered taxpayer supplying unprocessed agricultural products must issue a Bill of Supply rather than a tax invoice.
Essential Details for a Bill of Supply
GST regulations stipulate specific information that must be included in a Bill of Supply. These mandatory particulars are:
- The name, address, and GSTIN of the supplier.
- A unique Bill of Supply number, which must not exceed 16 characters, be generated sequentially, and be unique for each financial year.
- The date of issue.
- If the recipient is registered, their name, address, and GSTIN.
- The HSN Code for goods or the Accounting Code for services. The number of required HSN digits depends on the turnover of the preceding financial year, as follows:
| Turnover | No. of HSN digits |
|---|---|
| Less than Rs 1.5 crores | HSN code is not required |
| Between Rs 1.5 - 5 crores | 2-digit HSN code |
| Above Rs 5 crores | Must use 4-digit HSN code |
- A clear description of the goods or services provided.
- The value of the goods or services after any adjustments for discounts or abatements.
- The supplier's signature or digital signature.