Businesses registered to collect GST issue a tax invoice to the customer. The Products and Services Tax (GST) rate applied to the products and services sold is included on such an invoice. On the other hand, certain GST-registered businesses are not permitted to have any tax on the invoices they send out.
These sorts of vendors must provide a Bill of Supply. A Bill of Supply must be provided when the Goods and Services Tax (GST) does not apply to a transaction or when the GST is not to be recovered from the customers.
What is the Bill of Supply?
A registered taxable person delivering exempted goods or services under GST or paying tax under the Composition Scheme as defined in section 10 of the Act must issue a Bill of Supply instead of a tax invoice, according to section 31(3) of the CGST Act, 2017.
A Bill of Supply, like a Tax Invoice, serves as proof of sale by the registered taxpayer and includes information such as the description of products or services, the value of supply, and so on.
However, a tax invoice is generated when a registered taxpayer delivers products or services subject to GST, representing such tax information on the tax invoice. On the other hand, a Bill of Supply is issued when GST is not applicable to the products or services given by the registered supplier to the recipient.
As a result, the Bill of Supply contains no tax information.
However, if the value of the supply is less than Rs 200, a registered taxpayer is not needed to provide a Bill of Supply.
What are some relaxations in the case of a Bill of supply?
Value less than Rs. 200: If the value of the goods or services, or both, is less than Rs. 200, a bill of supply is not required to be issued.
Signature or digital signature is not necessary: When a bill for supply is issued digitally or online, no signature or electronic signature is required. We frequently come across bills that include a statement.”A computer created this invoice.” This does not necessitate signature.”
Relaxation for serial No & address of customer: Due to the massive volume of transactions in the banking, insurance, and passenger transportation sectors, taxpayers are not required to save the client’s address and serial number.
Deemed Bill of Supply: In the case of a non-taxable supply (such as petroleum or alcoholic liquor), a tax invoice or other documentation produced in addition to any other act shall be considered a Bill of Supply.
Consolidated Bill of Supply: If the value of the products or services given is less than Rs. 1200, a separate Bill of Supply is not necessary if the buyer does not require one. At the end of each day, a consolidated Bill of Supply can be issued to each receiver separately.
Invoice-cum-bill of supply: When a registered person supplies both taxable and exempted goods or services, he might issue a single ‘Invoice cum bill of supply.’
Relaxation in the case of HSN Code or SAC: HSN codes are eight digits long, whereas SAC codes are six digits long. Relaxation is provided for the number of digits in the HSN code, which is listed below:
Who should issue the Bill of Supply?
Bills of Supply should be issued by the registered parties listed below:
Composition Dealer
If a taxpayer’s yearly turnover is less than Rs. 1.5 crores* (or Rs. 75 lakhs for taxpayers in the northeastern states and Uttarakhand), they are eligible for the composition program. A dealer who engages in the composition scheme must make tax deposits on their receipts; they cannot collect tax from their customers. The GST is an out-of-pocket expenditure that the composition merchant must bear.
They are unable to charge GST on the invoice. As a result, a composition dealer must generate a Bill of Supply rather than a Tax Invoice. The composition dealer must write the following lines on the Bill of Supply: “Composition taxable person not qualified to collect taxes on supplies.” This is mandated by law.
Exporters
Furthermore, an exporter’s invoice does not have to include the Goods and Services Tax (GST). This is because export supplies are exempt from taxation. As a result, a taxpayer exporting goods may issue a Bill of Supply rather than a tax invoice.
The dealer must include the following disclosures in their Bill of Supply: “Supply Meant For Export On Payment Of IGST” and “Supply Meant For Export Under Bond Or Letter Of Undertaking Without Payment Of IGST.”
The Supplier of Exempted Goods
A Bill of Supply must be issued anytime a registered dealer supplies an exempt good or service. For example, a registered taxpayer selling unprocessed agricultural products must provide the buyer with a Bill of Supply rather than a tax invoice.
What’s in the Bill of Supply?
Several specifics that must be provided in a bill of supply are stated in the statute governing the Goods and Services Tax (GST). The following is a list of what should be included in a Bill of Supply:
- Include the name, address, and GSTIN number of the supplier.
- Number on the Bill of Supply
- The recipient’s name, address, and GSTIN are required if the recipient is already registered.
- Whether it’s the HSN Code for products or the Accounting Code for services,
- Explanation of the products and services in detail
- Publication date
- After any applicable discounts or rebates, the value of the products or services
- The provider of goods or services’ signature or digital signature
What are the differences between Tax Invoice and Bill of Supply?
| Tax Invoice | Bill Of Supply |
| It is issued when there is a taxable supply. | It is issued in case of exempt supply. |
| Input Tax Credit can be issued on the basis of Tax Invoice. | Input Tax credit cannot be claimed on the basis of Bill of Supply. |
| Amount of tax & rate of tax is mentioned on the Tax Invoice. | The amount of tax & rate of tax not mentioned on Bill of supply. |
| Composition dealers cannot issue a Tax invoice. | Composition dealer issue Bill of supply. |
If the recipient is not registered and the value exceeds Rs. 50,000, the following information must be included on the invoice:
| No such information is required in case of Bill of supply |
Importance of Bill of Supply under GST
A Bill of Supply is essential for both the supplier and the recipient of products or services. Here are some of the most important reasons why a Bill of Supply is required under GST.
GST Compliance
A licensed dealer must produce a tax invoice for all taxable supplies made. A Bill of Supply should be supplied instead if the merchant is not eligible to collect GST. The dealer complies with GST requirements and avoids fines for noncompliance by providing a Bill of Supply.
Input Tax Credit
A registered dealer may claim Input Tax Credit (ITC) for GST paid on purchases of products or services utilized for commercial purposes. The ITC, however, can be claimed only if the dealer possesses a valid tax invoice or other prescribed paperwork for the purchases made. A Bill of Supply is the specified paperwork for exempt supplies or supplies made under the Composition Scheme. As a result, it is critical for the dealer to issue a Bill of Supply in order for the recipient to claim ITC.
Record-keeping
The GST system requires traders to keep precise records of all transactions. The dealer retains accurate records of exempt supplies or supplies made under the Composition Scheme by providing a Bill of Supply. This aids in precise accounting and auditing.
Avoiding disputes
A Bill of Supply clearly states that no GST was applied to the supply. This helps to avoid any disagreements between the provider and the recipient on the transaction’s tax component.
Ease of doing business
The Bill of Supply is a straightforward document that is simple to issue and manage. This makes it simpler for small enterprises and Composition Dealers to comply with GST requirements and run their businesses effectively.
Wrapping It Up
The Bill of Supply is a critical document in India’s GST system. It is issued by registered dealers in lieu of a tax invoice for exempt supply or Composition Scheme supplies. The Bill of Supply assists in ensuring GST compliance, allowing the recipient to claim Input Tax Credit, facilitating correct record-keeping, avoiding conflicts, and simplifying the business operations of small firms and Composition Dealers.
As a registered dealer, you must grasp the Bill of Supply idea and ensure that it is issued correctly when required. Failure to give or erroneously issue a Bill of Supply might result in sanctions and legal implications. To ensure compliance with the requirements, it is best to obtain professional assistance or consult the GST guidelines.
Businesses may contribute to the growth and development of the Indian economy while assuring their own growth and success by adhering to the GST requirements correctly.
FAQs
What is the time restriction for submitting a GST bill of supply?
If the invoice is issued after the provision of service, it must be done within 30 days of the date of supply of service, according to invoicing regulations.
What exactly is a bill of supply in SAP b1?
According to the new rules (Section 31 of the CGST Act), under a composition scheme, a seller must deliver a Bill Of Supply to the customer for the value of goods sold instead of a tax invoice, and taxes are not applicable.
What is the purpose of a bill of supply?
The supplier’s name, address, and GSTIN. Bill of Supply number (it must not be more than 16 characters extended, must be generated sequentially, and each Bill of Supply must have a unique number for that fiscal year) The date of publication.
Is TDS levied on bills of supply?
The value of supply is to be taken as the amount excluding the tax specified on the invoice for the purpose of TDS deduction. This implies that TDS will not be taken from the CGST, SGST, or IGST components of the invoice.
Is a bill of supply required?
A tax invoice cannot be issued since a person cannot collect tax on his or her transactions. As a result, a composition supplier must give a bill of supply.
Is the HSN code required for the Bill of supply?
Yes, HSN is necessary for bills of supply, subject to specific conditions: HSN Code is not required if annual turnover is less than Rs. 15 million.
What is GST Rule 47?
According to Rule 47 of the CGST Rules, 2017, the Tax Invoice referred to in Rule 46 of the CGST Rules, 2017 must be issued within 30 days of the date of service provided.
Who is eligible to receive ITC?
ITC can only be claimed if the person has a valid document and has received the goods or services or their installments.
What exactly is a DC challan?
A Delivery Challan is a formal document generated when products are carried from one location to another, which may or may not result in sales.
What exactly is the TDS threshold limit?
The threshold limit is the amount of payment for which no TDS is required. TDS will be applied only if the payment exceeds the allowable amount.
