A bill of supply is what you raise instead of a tax invoice when you are not allowed to charge GST.
Who raises one
- Composition dealers. You pay tax at a flat rate on turnover and may not collect it from customers. Issuing a tax invoice would be wrong.
- Anybody supplying exempt or nil-rated goods.
If neither is you, ignore this document type entirely.
How it is different
| Tax invoice | Bill of supply | |
|---|---|---|
| Shows GST | Yes | No — forced to zero |
| Customer can claim input credit | Yes | No |
| Numbering | Its own series | A separate series of its own |
| Who raises it | A regular dealer | A composition dealer, or on exempt supply |
The tax is forced to zero, not left to you. That is deliberate. A composition dealer who accidentally charges GST on one document has created a problem that takes an accountant to unpick, so the product does not allow it.
Setting it up
- In Settings → Business profile, mark the business as a composition dealer if that is what you are.
- Give the bill of supply its own numbering series in Settings → Numbering.
- Raise them exactly as you would an invoice.
How the document decides
You do not tell the system “this is a bill of supply” and hope. It follows from the tax treatment on the lines, which is one of six.
| Treatment | Means |
|---|---|
| Taxable | Normal. GST is charged. |
| Exempt | An exempt supply. No tax. |
| Nil rated | Zero per cent by notification. |
| Zero rated | Export or SEZ under an LUT. |
| Non-GST | Outside GST altogether. |
| Reverse charge | The recipient pays the tax, not you. |
A bill of supply is what you issue when nothing on it is taxable — because you are registered under composition, or because what you sell is exempt or nil rated.
What is different about it
- It says Bill of supply, not Tax invoice. That wording is the legal point of the document.
- It carries no tax columns and no tax summary, because there is no tax to summarise.
- It has its own number series, separate from your tax invoices.
- A composition dealer’s bill of supply must not show tax collected — and cannot, here, because there is none to show.
Issuing the wrong one is not a formatting mistake. A tax invoice that charges GST you are not entitled to collect is a real problem, and so is a bill of supply for something that was taxable. Set the treatment on the item once, in the item master, and every document after it is right by default.
Correcting one
A sent bill of supply is corrected as an invoice is: raise a credit note against it for goods returned, or, if it will not be paid, Write it off. The credit note takes exempt turnover back in the return and in the books, where the bill of supply’s income sits in Exempt sales.
Where to go next
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