Bill of Supply Under GST 2026 — When to Issue & Correct Format
Not every GST-registered supplier issues a Tax Invoice. If you are a Composition Scheme taxpayer or make exempt supplies, you must issue a Bill of Supply instead. The critical difference: a Bill of Supply shows no GST — the tax is absorbed in the price, and the buyer gets no ITC.
By Arjun Sharma· GST & Tax Compliance Specialist···Reviewed for GST accuracy
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Quick Answer
A Bill of Supply is issued instead of a Tax Invoice in two cases: (1) you are registered under the GST Composition Scheme, or (2) you are making exempt supplies (fresh vegetables, books, healthcare, etc.). It must prominently show "BILL OF SUPPLY" at the top, your GSTIN, item descriptions, and total value — but no GST amount, because the tax is absorbed in the price and the buyer gets no ITC.
What is a Bill of Supply?
A Bill of Supply is a commercial document issued by a GST-registered supplier in two cases: (1) when making supplies exempt from GST, or (2) when registered under the Composition Scheme. Unlike a tax invoice, it does not show GST separately.
When to Issue Bill of Supply vs Tax Invoice
Situation
Document to Issue
Regular taxable supply (goods or services)
Tax Invoice
Composition Scheme supplier (any supply)
Bill of Supply
Exempt supply by regular taxpayer
Bill of Supply
Nil-rated supply by regular taxpayer
Bill of Supply
Export of goods (under LUT)
Tax Invoice with "Supply meant for export under LUT"
Export of goods (with tax payment)
Tax Invoice
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Businesses under the Composition Scheme pay tax at a flat rate on turnover (not on each sale). They cannot collect GST from buyers. Therefore, they issue a Bill of Supply with the statement "Composition taxable person, not eligible to collect tax on supplies."
Scheme
Tax Rate
Eligible Turnover
Composition — Manufacturers/Traders (goods)
1% of turnover
Up to ₹1.5 crore
Composition — Restaurants
5% of turnover
Up to ₹1.5 crore
Composition — Service providers (CGST notification)
6% of turnover
Up to ₹50 lakh
Mandatory Fields in a Bill of Supply
"BILL OF SUPPLY" prominently at the top
Supplier name, address, and GSTIN
Bill of Supply number — unique within financial year
Date of issue
Buyer name and address (and GSTIN if registered)
HSN code of goods or SAC code of services
Description of supply
Value of supply (inclusive of tax paid by supplier)
For Composition dealers: "Composition taxable person, not eligible to collect tax on supplies"
Supplier signature
Important
A Bill of Supply does NOT show any GST amount, CGST/SGST breakdown, or tax rate. The buyer cannot use it to claim ITC.
Common Exempt Supplies That Require Bill of Supply
Health care services by registered medical practitioners (exempt)
Educational services by schools and colleges (exempt)
Unprocessed grains (wheat, rice — most)
FAQs
Can a buyer claim ITC on a Bill of Supply?
No. Input Tax Credit is only available on Tax Invoices. A Bill of Supply shows no GST, so there is nothing to claim as ITC.
What is the difference between "nil rated" and "exempt" supply?
"Nil rated" supply has a GST rate of 0% — the rate exists but is zero. "Exempt" supply is outside the scope of GST altogether. Both require a Bill of Supply from a regular taxpayer, not a tax invoice.
Does a Composition dealer need to file GSTR-1?
No. Composition dealers do not file GSTR-1. They file CMP-08 (quarterly statement of tax payment) and GSTR-4 (annual return). Their bills of supply are not individually reported to GSTN.
Can I issue both a tax invoice and a bill of supply?
Yes, if you make both taxable and exempt supplies in the same business. Issue a tax invoice for taxable supplies and a bill of supply for exempt supplies. Maintain separate document series for each.
Why Businesses Stop Using Excel for GST Invoices
Manual GST calculation mistakes
One wrong CGST/SGST split or a misapplied rate triggers notices and ITC denial for your buyer.
Slow invoice creation
Copying last month's Excel file, updating dates, recalculating — 20 minutes for what should take 30 seconds.
Formatting breaks on every device
Excel invoices look different on every printer and PDF converter. Clients complain about unreadable layouts.
No easy sharing or payment link
Sending PDFs over WhatsApp with no way for clients to pay directly slows down collections.
Incorrect tax type (IGST vs CGST+SGST)
Excel can't auto-detect intra vs inter-state supply. Wrong tax type = ITC rejected for your buyer.
Disclaimer: The information in this article is for general informational purposes only and does not constitute professional tax, legal, or financial advice. GST rules and rates are subject to change. Consult a qualified CA or tax professional before making compliance decisions.
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