A bill of supply is issued where no tax is charged — because the supply is exempt, nil-rated or non-taxable, or because the supplier is under the composition scheme. It must not show tax, and the recipient cannot claim credit against it. Issuing a tax invoice where a bill of supply is required, or the reverse, is the error to avoid.
Bill of Supply
For exempt supplies and for a supplier paying tax under the composition scheme
A bill of supply is issued where no tax is charged — because the supply is exempt, nil-rated or non-taxable, or because the supplier is under the composition scheme. It must not show tax, and the recipient cannot claim credit against it. Issuing a tax invoice where a bill of supply is required, or the reverse, is the error to avoid.
| Supplier | Detail |
|---|---|
| Legal name | [COMPANY NAME] |
| Trade name, where different | [TRADE NAME] |
| GSTIN | [GSTIN] |
| Address of the place of business | [FULL ADDRESS] |
| State and State code | [STATE] — [CODE] |
| Basis on which a bill of supply is issued | [Supply is exempt, nil-rated or non-taxable / Supplier is registered under the composition scheme] |
| Document | Detail |
|---|---|
| Bill of supply number | [SERIAL] (consecutive, unique for the financial year) |
| Date | [DATE] |
| Place of supply | [STATE] — [CODE] |
| Purchase order reference | [PO NUMBER AND DATE] |
| Currency | [INR] |
| Recipient | Detail |
|---|---|
| Name | [CUSTOMER NAME] |
| Address | [FULL ADDRESS] |
| GSTIN, where registered | [GSTIN] |
| State and code | [STATE] — [CODE] |
| Whether registered | [Yes / No] |
Particulars of Supply
| # | Description of goods or services | HSN or SAC | Qty | Unit | Rate (₹) | Amount (₹) | Discount (₹) | Value (₹) |
|---|---|---|---|---|---|---|---|---|
| 1 | [DESCRIPTION] | [CODE] | [QTY] | [UOM] | [RATE] | [AMOUNT] | [AMOUNT] | [AMOUNT] |
| 2 | [DESCRIPTION] | [CODE] | [QTY] | [UOM] | [RATE] | [AMOUNT] | [AMOUNT] | [AMOUNT] |
| 3 | [DESCRIPTION] | [CODE] | [QTY] | [UOM] | [RATE] | [AMOUNT] | [AMOUNT] | [AMOUNT] |
| Total | [AMOUNT] | [AMOUNT] | [AMOUNT] |
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These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
This is the defining rule. A composition supplier is not permitted to collect tax from the recipient, and an exempt supply carries no tax to collect. A bill of supply showing a tax amount, or a tax rate column with figures in it, is defective and, in the case of a composition supplier, amounts to collecting tax that may not lawfully be collected.
Bills of supply and tax invoices should be numbered in separate series, each consecutive and unique for the financial year. Mixing them into one sequence makes reconciliation with the returns difficult and makes gaps look like missing invoices.
A supplier registered under the composition scheme must state, on the face of every bill of supply, that it is a composition taxable person not eligible to collect tax on supplies. Omitting it is a defect that is easy to correct in the template and difficult to explain in an audit.
Where a single supply covers both taxable and exempt items, issue a tax invoice covering both, showing the exempt lines at nil rather than issuing two documents. Splitting one transaction across a tax invoice and a bill of supply complicates reconciliation for both parties.
Exempt and nil-rated supplies use a bill of supply. Non-taxable supplies fall outside the levy. Zero-rated supplies — exports and supplies to a special economic zone — are taxable supplies at a zero rate and require a **tax invoice** with the prescribed endorsement, not a bill of supply. Treating an export as exempt and issuing a bill of supply blocks the refund claim.
The recipient cannot claim input tax credit against a bill of supply, because no tax has been charged. Recipients occasionally attempt it. Stating the position on the document, as the declaration does, prevents the argument.
A supplier under the composition scheme pays tax at the applicable rate on turnover, cannot claim input tax credit, cannot make inter-State outward supplies of goods, and is subject to a turnover limit above which the scheme ceases to be available. Crossing the limit means moving to the normal scheme and issuing tax invoices from that point. Track turnover against the limit rather than discovering it at year end.
Where the value of a supply is below the prescribed threshold and the recipient is unregistered and does not require the document, a bill of supply need not be issued for each supply, subject to a consolidated document being issued at the close of the day. Confirm the current threshold and the conditions before relying on the relaxation.
Exempt and composition supplies are reported in the returns, in their own fields. A supplier that issues bills of supply but reports nothing produces a mismatch between the documents and the return, which is exactly what reconciliation exercises pick up.
The statutory payment timeline for a registered micro or small enterprise supplier applies whether the document is a tax invoice or a bill of supply. State the registration so the buyer knows the position.
A bill of supply already issued is corrected by a credit or debit note referencing it, not by editing or reissuing. The note carries its own particulars and its own numbering.
Bills of supply and the underlying records must be retained for the period prescribed, and longer where any proceeding is pending.
Reflects Indian tax law current as of {{DATE OF USE}}. The composition turnover limit and rates, exemption notifications, HSN digit requirements and the small-value relaxation all change — have the template and the accounting configuration reviewed by a tax adviser, and reconfirm whenever the exemption position or the scheme registration changes.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.