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What is a Bill of Supply under GST? Format & Rules Explained

Written by: GSTBillFree Compliance Team

Accurate billing for exempt goods. Generating a "Tax Invoice" when you are not allowed to charge tax is illegal. Our experts clarify exactly when you must switch your document title to "Bill of Supply" to stay safe.

When you sell a taxable product or service, you issue a Tax Invoice and collect GST from your customer. But what happens if you sell products that have 0% GST, or if you are registered under a scheme that strictly forbids you from collecting tax?

In such scenarios, you cannot issue a Tax Invoice. The GST Act mandates that you must issue a document called a "Bill of Supply." Let's understand who exactly needs to generate this document and what the rules are.

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Who Must Issue a Bill of Supply?

Under Section 31 of the CGST Act, a Bill of Supply is issued in the following two specific situations:

1. Suppliers of Exempted Goods or Services

If your business sells goods or services that are entirely exempt from GST (0% tax rate), you cannot charge tax on them. Examples of exempted goods include fresh fruits and vegetables, unbranded flour, raw silk, and certain educational or healthcare services. If your invoice only contains these items, you must issue a Bill of Supply instead of a Tax Invoice.

2. Taxpayers under the Composition Scheme

The Composition Scheme allows small MSMEs to pay a flat, low percentage of their turnover as tax out of their own pocket. Because they are paying the tax themselves, the law prohibits them from collecting any GST from their customers. Therefore, a Composition Dealer must always issue a Bill of Supply, regardless of what goods they are selling.

Mandatory Text: For Composition Dealers, the GST rules strictly require the following text to be printed at the top of the Bill of Supply: "Composition taxable person, not eligible to collect tax on supplies."

What Must a Bill of Supply Contain? (Format)

The format of a Bill of Supply is very similar to a standard invoice, but it completely lacks the tax breakdown columns (CGST, SGST, IGST). According to the GST rules, it must contain:

  1. The name, address, and GSTIN of the supplier.
  2. A consecutive serial number (unique for the financial year).
  3. The date of issue.
  4. Name, address, and GSTIN/UIN of the recipient (if registered).
  5. HSN Code (or SAC code for services).
  6. Description of goods or services.
  7. Value of supply of goods or services (excluding any tax).
  8. Signature or digital signature of the supplier.

How to Generate a Bill of Supply using GSTBillFree?

You don't need a separate software to generate a Bill of Supply. You can easily adapt our free tool to create one:

Conclusion

Issuing the correct legal document is essential for maintaining transparent accounting books. A Bill of Supply ensures that the GST department knows exactly why tax was not collected on a particular transaction. Use our online generator to quickly draft Bills of Supply without messing around with Excel formatting.

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Frequently Asked Questions (FAQs)

Can a buyer claim ITC on a Bill of Supply?
No. Since a Bill of Supply does not contain any GST tax amount, the buyer cannot claim any Input Tax Credit (ITC) against it.
Can I issue an invoice that has both taxable and exempt goods?
Yes! If a registered person is supplying taxable as well as exempted goods to an unregistered person (B2C), they can legally issue a single 'Invoice-cum-Bill of Supply' for the transaction.
Do I need to issue a Bill of Supply for sales under Rs. 200?
No, a registered person is not required to issue a Bill of Supply if the value of the goods or services supplied is less than Rs. 200, provided the buyer is unregistered and does not explicitly ask for a bill. You can issue a consolidated bill at the end of the day for all such small sales.