What is a Bill of Supply under GST?

What is Bill of Supply?

A GST-registered firm is typically required to provide the buyer with a GST tax invoice. This invoice outlines the GST rate applied to the products or services provided, allowing the seller to claim Input Tax Credit (ITC) on the GST paid to their suppliers and collect GST from their customers. However, composite dealers cannot issue a GST tax invoice, as they are not allowed to claim ITC or collect tax under GST. Instead, they issue a bill of supply. In summary, when GST is not applicable to a transaction or not collected from the customer, a bill of supply is used as a substitute for a tax invoice.

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What are the differences between Tax Invoice and Bill of Supply?

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What is the format of Bill of supply?

Given below are the contents of a GST bill of supply. Here is the format of GST bill of supply -

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What are some relaxation in case of Bill of supply?

• Value less than Rs. 200: If the value of goods or services or both is less than Rs. 200, then a Bill of supply is not required to be issued.
• Non-requirement of signature or digital signature: When a Bill of supply is issued digitally or electronically, then there is no requirement for a signature or digital signature.
• Relaxation for serial No. & address of customer: Companies like banking, insurance, and transportation have large transaction volumes. Therefore, the taxpayers are not required to keep a track of the customer’s addresses and serial numbers.
• Deemed Bill of supply: Tax invoices or documents issued under any other statute are treated as Bills of Supply for non-taxable supplies, such as petrol and alcoholic beverages, which fall outside the scope of GST.
• Consolidated bill of supply: When the value of goods or services supplied is less than Rs. 1200, then a separate Bill of supply is not required if the buyer does not request for it. A consolidated Bill of supply can be issued at the end of each day to each recipient separately.
• Invoice-cum-bill of supply: When a registered person supplies both taxable and exempt goods or services, they can issue a single "Invoice-cum-Bill of Supply" instead of separate documents. This combined document ensures compliance while simplifying the invoicing process.
• Relaxation in case of HSN Code or SAC: HSN code is 8 digit while SAC is 6 digit code.

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Who is required to issue a Bill of supply?

Given below are the taxpayers who are required to issue a Bill of supply:

Composition Dealer

A taxpayer with annual revenue below Rs. 1.5 crores (Rs. 75 lakhs for Uttarakhand and the northeastern states) can opt for the composition scheme. Under this plan, the dealer cannot collect taxes from buyers and must pay GST out of their own receipts. As GST cannot be included in the invoice, a composition dealer must issue a Bill of Supply instead of a tax invoice.

Exporters

Exporters are not required to include GST in their invoices, as exports are zero-rated. Instead of a tax invoice, exporters issue a Bill of Supply. The Bill of Supply must specify whether the supply is made under a bond or a Letter of Undertaking without payment of IGST or with the payment of IGST. The following statements must be included:

• Supply Meant For Export Under Bond/Letter Of Undertaking Without Payment Of IGST.
• Supply Meant For Export On Payment Of IGST.

Exempted Goods Supplier

A registered dealer supplying exempt goods or services must issue a Bill of Supply instead of a tax invoice. For example, when supplying raw agricultural products, the dealer should provide a Bill of Supply rather than a tax invoice.

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Importance of Bill of Supply Under GST

A Bill of Supply is essential for both the supplier and recipient of goods or services under GST. The following are key reasons why it is required:

• GST Compliance:
  For taxable supplies, a tax invoice must be issued by a registered dealer. However, if the dealer is not allowed to collect GST (e.g., Composition Dealers or exempt supplies), they must issue a Bill of Supply. This ensures compliance with GST regulations and helps avoid penalties for noncompliance.
• Maintaining Records:
  Under the GST system, dealers must maintain accurate records of all transactions. By issuing a Bill of Supply, dealers ensure proper documentation of supplies under the Composition Scheme or those exempt from GST, facilitating precise accounting and auditing.
• Averting Disputes:
  A Bill of Supply clearly states that no GST has been applied to the transaction. This transparency minimizes the risk of disputes between the supplier and the recipient regarding the tax component.
• Simplified Business Operations:
  A Bill of Supply is a simple document that is easy to issue and manage. This helps small businesses and Composition Dealers streamline their operations while complying with GST regulations.
• ITC Claim:
  Input Tax Credit (ITC) can be claimed by registered dealers only if they possess valid documentation, such as a tax invoice. However, for exempt supplies or supplies under the Composition Scheme, a Bill of Supply serves as the required documentation. While ITC is not applicable for these supplies, the Bill of Supply ensures proper record-keeping for both parties.

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