Generally, a business registered under GST has to issue a GST tax invoice to the byer. Such an invoice mentions the GST rate charged on the goods and services sold, and the seller is able to use the same to collect GST from his buyers, as well as claim ITC on GST paid to his suppliers. However, in case of composite dealers, who are not authorised to collect tax under GST rates, nor are allowed to claim ITC, a tax invoice cannot be issued. The alternate to that is the bill of supply. In short, a bill of supply is issued when GST is not applicable on a transaction or when GST is not to be recovered from the customer.
Who should issue Bill of Supply?
The following registered business should issue a Bill of Supply:
- 1. Composition Scheme Dealers - A taxpayer whose turnover is less than INR 75 lakh can opt for the GST composition scheme. Such a dealer who has opted for the composition scheme has to deposit tax on their receipts themselves, i.e. they are not allowed to collect any tax from their buyers. The GST has to be paid out of their own pocket and hence a composition dealer has to raise a Bill of Supply instead of a Tax Invoice. The composition dealer has to mention the words “Composition taxable person not eligible to collect taxes on supplies” on the Bill of Supply being issued
- 2. Exporters - An exporter is also not required to charge GST on the invoice. This is because export supplies are zero-rated. Hence a taxpayer exporting goods can issue a Bill of Supply in place of a tax invoice. The exporter has to mention "Supply meant for export on payment of IGST" and "Supply meant for export under Bond or Letter of Undertaking without payment of IGST" on the Bill of Supply being issued
- 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 regular taxpayer provides unprocessed agricultural products, they have to issue a Bill of Supply instead of a tax invoice
GST Bill of Supply Format
The GST law has specified the following particulars that should be present in a Bill of Supply:
- 1.Name, address, and GSTIN of the supplier.
- 2.Bill of Supply No. (it must be generated consecutively and each Bill of Supply will have a unique number for that financial year).
- 3.Date of issue.
- 4. If the recipient is registered then the name, address, and GSTIN of the recipient.
- 5. HSN Code of goods or SAC Code for services. The number of digits that are required to be mentioned based on turnover is as follows:
- a. Turnover less than INR 1.5 Crores – HSN code not required.
- b. Turnover between INR 1.5 Crores to INR 5 Crores – 2 digit HSN code.
- c. Turnover above INR 5 Crores – 4 digit HSN Code.
- 6. Description of goods / services.
- 7. Value of the goods / services after adjusting any discount or abatement.
- 8. Signature or Digital Signature of the supplier.