Understanding the Basics Of A Bill Of Supply

Within the complex realm of business transactions, documentation assumes a critical role. Essential paper trails, such as invoices, receipts, and bills of lading, intricately facilitate the functioning of commerce. Among these, the bill of supply emerges as a unique instrument employed in scenarios where the standard tax invoice may not be suitable. A GST bill of supply plays a vital role in maintaining the seamless operation of businesses by ensuring adherence to tax regulations and creating a transparent record of exchanged goods and services.

What exactly is a bill of supply, and under what circumstances does it become relevant?

Meaning of bill of supply

• In the framework of the Goods and Services Tax (GST), a bill of supply serves as a substitute for a tax invoice.
• It is dispensed by registered businesses engaged in transactions involving exempted goods or services, as well as by composition vendors who lack the eligibility to levy taxes on their clientele. This document becomes obligatory in scenarios where a tax invoice is not mandated. For example, in the supply of exempted goods, business with unregistered dealers, or transactions involving non-taxable supplies.
• In India, entities registered under the Goods and Services Tax (GST) regime are required to furnish a bill of supply for such sales transactions.

A bill of supply can be considered as a special kind of receipt given by a business to its customers. This receipt shows what goods or services were provided and how much they cost. The unique thing about a bill of supply is that it doesn’t include any taxes.

There are two main situations where businesses use bills of supply:

Exempt Supplies

• Some businesses sell products or offer services that are not taxed under the Goods and Services Tax (GST).
• In these cases, instead of a regular receipt with taxes, they use a bill of supply.
• Examples of such untaxed items include basic food grains, educational services, and healthcare.

• Certain businesses, part of the GST composition scheme, don’t have to deal with taxes directly.
• For them, the bill of supply is like their main receipt for all transactions.
• They don’t charge or collect taxes separately.
• The bill of supply covers everything they sell.

While the fundamental purpose of a bill of supply remains the same, its specific structure and requirements can differ based on the type of GST registration and the nature of goods or services involved.

Regular GST-Registered Suppliers

• Businesses falling under this category need to ensure that their bill of supply includes specific essential details.
• These comprise information about the supplier and recipient, a description of the goods or services, quantity, value, HSN/SAC code, and a clear declaration stating “GST is not applicable.”

• The bill of supply for businesses operating under the composition scheme follows a slightly different format.
• It should encompass details such as information about the supplier and recipient, a description of the goods or services, quantity, value, and a declaration confirming that the supplier is registered under the composition scheme.

Be it a startup, small business, or an established export venture, a bill of supply holds significant importance for all business entities.

Bill of supply for small businesses

Simplified compliance

• Especially beneficial for small businesses dealing with exempt supplies, bills of supply offer a streamlined alternative to tax invoices.
• This eases the burden of paperwork and administrative tasks.

• Even in case of exempt supplies, a well-structured bill of supply is essential.
• It ensures financial transactions are clear and transparent, fostering trust with customers and potential investors.

Proof of export

• Bills of supply play a pivotal role in claiming duty drawback—a government incentive for exporters.
• Bill of supply for exporters acts as evidence that the goods were exported and not sold domestically, facilitating tax refunds.

• In foreign trade, bills of supply become crucial supporting documents.They are vital for tasks such as customs clearance and applications for letters of credit, contributing to the smooth flow of export-related transactions.

Goods exported under GST are exempt from taxation. GST does not apply to foreign recipients of goods or services. Therefore, when exporting, the exporter can issue a bill of supply without referencing CGST, SGST, IGST, and Cess. Similar to the bill of export from a composition scheme dealer, the bill of supply from an exporter should include the following notations:

• “Supply Meant For Export On Payment Of IGST”
• “Supply Meant For Export Under Bond Or Letter Of Undertaking Without Payment Of IGST”

A bill of supply is required to contain the following information (details)

Details of the supplier	Name of the firm, address, contact number, GSTIN,
Details of the purchaser	Name of the firm, address, contact number, GSTIN (in case if registered)
Serial number	It must be generated consecutively, unique for each bill of supply in a particular financial year. It should not exceed 16 characters.
Date	The date of issue of the bill of supply must be clearly specified.
Description of goods or services	A detailed description of the goods supplied or services offered must be given.
Code	For goods, the HSN code needs to be mentioned For service, the accounting code needs to be mentioned.
Total value of the goods or services	The total value of the goods or services after adjusting any discount must be clearly specified
Declaration	The bill of supply must carry a declaration that it shows the actual price of the goods or services mentioned and that all details are correct and true.
Signature	The bill of supply should carry a signature or digital signature of the supplier

आपूर्तिकर्ता का विवरण	फर्म का नाम, पता, संपर्क नंबर, जीएसटीआईएन
क्रेता का विवरण	फर्म का नाम, पता, संपर्क नंबर, जीएसटीआईएन (पंजीकृत होने की स्थिति में)
क्रम संख्या	इसे किसी विशेष वित्तीय वर्ष में आपूर्ति के प्रत्येक बिल के लिए लगातार, अद्वितीय रूप से तैयार किया जाना चाहिए। यह 16 अक्षरों से अधिक नहीं होना चाहिए.
तारीख	आपूर्ति बिल जारी करने की तारीख स्पष्ट रूप से निर्दिष्ट होनी चाहिए।
वस्तुओं या सेवाओं का विवरण	आपूर्ति की गई वस्तुओं या दी गई सेवाओं का विस्तृत विवरण दिया जाना चाहिए।
कोड	सामान के लिए एचएसएन कोड बताना जरूरी है सेवा के लिए, लेखांकन कोड का उल्लेख करना आवश्यक है।
वस्तुओं या सेवाओं का कुल मूल्य	The total value of the goods or services after adjusting any discount must be clearly specified
घोषणा	आपूर्ति के बिल में एक घोषणा होनी चाहिए कि यह उल्लिखित वस्तुओं या सेवाओं की वास्तविक कीमत दर्शाता है और सभी विवरण सही और सत्य हैं।
हस्ताक्षर	आपूर्ति के बिल पर आपूर्तिकर्ता के हस्ताक्षर या डिजिटल हस्ताक्षर होने चाहिए।

A Bill Of Supply Sample

Significance of Bill of Supply in the GST Framework

The bill of supply holds substantial importance for both suppliers and recipients of goods or services under the Goods and Services Tax (GST) regime. Here are the benefits of bill of supply:

GST compliance

• The bill of supply is an effective alternative for non-taxable Supplies.
• When a registered dealer is ineligible to collect GST on certain supplies, a bill of supply serves as the compliant alternative to a tax invoice.
• This ensures adherence to GST regulations, preventing penalties for non-compliance.

• Businesses can simplify the process of filing their GST returns with a GST bill of supply.
• This ensures eligibility for claiming input tax credit by maintaining precise records of Bills of Supply.

• For a registered dealer to claim Input Tax Credit, valid documentation is essential.
• The GST bill of supply is a valid document for ITC claims.
• In cases of exempt supplies or those under the Composition Scheme, the prescribed document is the Bill of Supply.
• Issuing this document becomes crucial for enabling recipients to claim ITC.

• The issuance of a bill of supply not only serves as a regulatory requirement but also contributes to enhancing the credibility of the business.
• It fosters trust with customers, showcasing transparency and adherence to established procedures.

• GST mandates dealers to maintain precise records of all transactions.
• Issuing a bill of supply facilitates proper record-keeping, particularly for exempt supplies or transactions under the composition scheme.
• This practice supports effective accounting and audit processes.

• The bill of supply clearly mentions that no GST has been charged on the supply.
• This clarity helps prevent disputes between suppliers and recipients concerning the tax aspect of the transaction.

• The bill of supply, being a straightforward document, is easy to issue and manage.
• This simplicity aids small businesses and composition dealers in complying with GST regulations, contributing to seamless business operations.

Nature of Sales

• A Tax Invoice is utilized for all taxable sales, whether local or central.
• A Bill of Supply is used for exempt sales or sales by composition dealers.

• In a Tax Invoice, CGST, SGST, and IGST should be itemized separately.
• In a Bill of Supply, no taxes are displayed on the bill.

• For a Tax Invoice, when the invoice value before taxes exceeds a certain limit, details such as name, address, state, and place of delivery are mandatory for unregistered buyers.
• A Bill of Supply does not require such information for unregistered buyers.

• A Tax Invoice can be issued for both local and central sales.
• A Bill of Supply can only be issued for local sales in the case of a composition dealer.

Frequently Asked Questions (FAQs)

1. What is a GST bill of supply?

1. Who should issue a bill of supply?

1. Can a business firm issue one bill of supply for many sales?