Bill of Supply under GST: Meaning, Importance and Format

What is a bill of supply in GST?

A bill of supply is a crucial document under the Goods and Services Tax (GST) regime in India. It is issued by registered suppliers when the supply of goods or services is exempt from GST or when the supplier is under the composition scheme. Unlike a tax invoice, which includes tax details and is used to claim the input tax credit, a bill of supply does not contain any tax amounts since no tax is charged on the transaction. 

This document ensures transparency and compliance within the GST framework by providing necessary information about the goods or services supplied. The GST law mandates the issuance of a bill of supply in specific scenarios, thereby distinguishing taxable and non-taxable supplies. It is essential for businesses to understand when to issue this document to adhere to the GST regulations effectively.

When is a bill of supply issued?

A bill of supply is a type of invoice issued in specific cases under the GST framework:

1. For composition dealers: Businesses registered under the GST composition scheme are required to issue a bill of supply instead of a tax invoice. This is because composition dealers are not permitted to collect GST directly from customers, claim input tax credit (ITC), or issue tax invoices. Therefore, they use a bill of supply to document sales.
2. For sales of GST-exempt goods or services: If a business deals in goods or services that are exempt from GST, it must issue a bill of supply instead of a tax invoice. Since no GST applies to these items, a bill of supply accurately reflects the sale without showing GST charges.
3. For exporters: Exporting goods or services is classified as zero-rated under the GST system. Exporters must issue a bill of supply, which denotes that while the items are taxable, the GST rate is zero. This ensures proper documentation for international sales without charging GST to foreign buyers.

In these cases, a bill of supply helps businesses comply with GST regulations while accurately reflecting their sales without GST.

What is the format of the bill of supply?

The format of a bill of supply is prescribed under the GST laws and must include specific details to be valid. As per the GST portal, a standard bill of supply format should contain the following elements:

Unlike a tax invoice, it does not include details of GST rates or amounts since it is used for transactions where GST is not applicable. Ensuring the correct format is crucial for compliance and helps maintain proper records for audit purposes. The GST portal provides templates and guidelines to assist businesses in generating accurate bills of supply.

Who is required to issue a bill of supply?

A bill of supply is required to be issued by specific categories of taxpayers under the GST regime. Firstly, it is mandatory for suppliers who are registered under the composition scheme. These suppliers cannot charge or collect GST from their customers and, therefore, must issue a bill of supply instead of a tax invoice. 

Secondly, suppliers of exempt goods or services must issue this document. Since no GST is applicable on exempt supplies, the bill of supply serves as proof of transaction without tax details. Additionally, any registered supplier making non-taxable outward supplies is obligated to issue a bill of supply. 

It is crucial for businesses to identify whether their supplies fall under these categories to ensure they issue the appropriate documentation. Non-compliance can lead to penalties and complications during GST audits. Understanding the criteria for issuing a bill of supply helps businesses streamline their invoicing processes and maintain compliance with GST regulations.

Contents of the bill of supply

A bill of supply must contain specific information as mandated by GST regulations to be considered valid. Key contents include:

1. Supplier details: The name, address, and GSTIN of the supplier.
2. Serial number: A unique serial number for identification and tracking.
3. Date of issue: The date on which the bill of supply is issued.
4. Recipient details: The name, address, and GSTIN (if applicable) of the recipient.
5. Description of goods/ services: Detailed description of the goods or services supplied.
6. Value of supply: The total value of the goods or services supplied.
7. Signature: The signature of the supplier or their authorised representative.

These contents ensure that the bill of supply provides comprehensive information about the transaction. The absence of tax details distinguishes it from a tax invoice and signifies that no GST has been charged. Accurate and complete bills of supply are essential for maintaining proper records and facilitating smooth audits. Compliance with these content requirements helps businesses adhere to GST regulations and avoid potential penalties.

How does GST impact the bill of supply?

GST has a significant impact on the issuance and structure of a bill of supply. Under the GST regime, the bill of supply becomes a vital document for specific types of transactions, such as exempt supplies and supplies made by composition scheme taxpayers. The introduction of GST necessitates clear differentiation between taxable and non-taxable supplies, which is achieved through the bill of supply. 

This document ensures that suppliers who cannot charge GST, either due to the nature of their supplies or their registration status, still have a formal record of their transactions. The GST laws stipulate the exact format and contents of a bill of supply, making it easier for businesses to comply with regulatory requirements. 

Additionally, the GST portal provides templates and guidelines to facilitate the correct issuance of bills of supply. By adhering to these guidelines, businesses can ensure transparency and avoid complications during GST audits. The implementation of GST has standardised the process, making it easier for businesses to manage their invoicing and maintain compliance with tax laws.

Relaxations in case of bill of supply

• Value less than Rs. 200: If the value of goods or services is less than Rs. 200, there is no need to issue a bill of supply
• No signature required: When a bill of supply is issued electronically, there is no need for a signature or digital signature. It is often noted on invoices generated by a computer that ‘This invoice is generated electronically and does not require a signature.’
• Relaxation for serial number and customer address: In sectors with high transaction volumes such as banking, insurance, and passenger transportation, taxpayers do not need to include the customer's address or a serial number.
• Deemed bill of supply: For non-taxable supplies like petroleum or alcoholic liquor, a tax invoice or other documents issued under different laws can be considered as a bill of supply.
• Consolidated bill of supply: If the value of goods or services is less than Rs. 1200, a separate bill of supply is not needed unless requested by the buyer. A consolidated bill of supply can be issued at the end of each day for all transactions with each recipient.
• Invoice-cum-bill of supply: When a registered person provides both taxable and exempt goods or services, they can issue a single document known as an 'Invoice-cum-bill of supply.’
• HSN code or SAC relaxation: The HSN code is typically 8 digits, and the SAC code is 6 digits. Relaxations are provided based on the turnover as shown below:

Differences between Tax Invoice and Bill of Supply

Conclusion

In conclusion, the bill of supply is a critical document under the GST regime, ensuring compliance and transparency for exempt supplies and supplies made by composition scheme taxpayers. Understanding the requirements and format of a bill of supply is essential for businesses to adhere to GST regulations and maintain proper records. The GST portal provides valuable resources to help businesses generate accurate bills of supply. The implementation of GST has standardised invoicing processes, facilitating easier compliance and reducing the risk of penalties. For businesses, especially those considering a business loan, maintaining accurate and compliant documentation is crucial for financial stability and credibility.