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Tax Invoice vs Bill of Supply: Which One to Issue

When a GST-registered business issues a tax invoice, when a bill of supply is correct instead, and what each must show.

By Swotboysandy 2 min read

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Schnellhefter Kunststoff
Photo: Rico Heil (silmaril), CC BY-SA 3.0, via Wikimedia Commons
In this guide
  1. The key difference
  2. When to use a tax invoice
  3. When to use a bill of supply
  4. Three examples
  5. Check your document before exporting
  6. Before you send it

The key difference

A tax invoice records taxable supplies and the tax charged by a registered supplier under the applicable rules. A bill of supply is used by a registered supplier for exempt supplies or where the supplier pays tax under the composition scheme. The customer’s registration status is not the deciding test. A sale to an unregistered consumer may still require a tax invoice.

When to use a tax invoice

For an ordinary taxable supply by a registered supplier, use the applicable tax-invoice rules. Include required supplier and recipient details, invoice number, date, description, taxable amount, tax rate and tax amount, together with other particulars that apply. Some low-value supplies and special situations have specific exceptions; confirm those before omitting a document.

When to use a bill of supply

In the exempt-supply and composition cases covered by section 31(3)(c), issue a bill of supply instead. It does not charge GST to the customer as a normal tax invoice does. Composition suppliers must also follow the relevant declarations and restrictions. Do not rename a taxable invoice merely because the buyer has no GSTIN.

Three examples

  • A regularly registered seller sells taxable goods to a consumer: the buyer being unregistered does not by itself require a bill of supply.
  • A registered supplier makes an exempt supply: check the bill-of-supply rules.
  • A supplier operating under composition: check the bill-of-supply requirements and do not separately collect tax from the customer as if on the regular scheme.

Mixed supplies and combined documents can have additional rules. These examples do not cover every exception.

Check your document before exporting

Confirm your registration status, the nature of the supply and applicable invoice rules first. Then choose a suitable layout and review every field. Invoiceful is a formatting tool, not a decision engine for GST treatment.

Before you send it

Invoiceful helps lay out an invoice; it does not determine your registration status, tax rate, place of supply, e-invoicing obligations or eligibility for input tax credit. Check the rules that apply to your transaction and ask your accountant when uncertain. A PDF or payment QR code is not proof of tax compliance.

Sources: CGST Act, section 31, CBIC invoicing FAQs, and the applicable CGST invoice rules.

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