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Bill of Supply vs Tax Invoice: Which One Should You Issue?

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Quick answer

Issue a bill of supply when you cannot charge GST: if you are registered under the composition scheme, or when you supply only exempt goods or services. It carries no GST amount, and the buyer cannot claim input tax credit on it. Registered suppliers of taxable goods or services issue a tax invoice instead. Bills of supply are governed by Rule 49 of the CGST Rules, 2017.

Bill of supply vs tax invoice at a glance

Tax invoiceBill of supply
Who issues itRegistered supplier of taxable goods or servicesComposition taxpayers, and suppliers of exempt goods or services
GST chargedYes — CGST + SGST/UTGST or IGSTNo
Input tax credit for buyerYes (if eligible)No
Governing ruleRule 46Rule 49

What a bill of supply must contain

  • Supplier’s name, address and GSTIN
  • A consecutive serial number (max 16 characters), unique for the financial year
  • Date of issue
  • Recipient’s name, address and GSTIN/UIN if registered
  • HSN code for goods or SAC for services
  • Description and value of the goods or services
  • Signature or digital signature of the supplier or authorised representative

The composition declaration

Composition taxpayers must mention “composition taxable person, not eligible to collect tax on supplies” on their bills of supply. Invoice Studio adds this line automatically when you choose Bill of Supply — and you can edit it.

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Frequently asked questions

A registered person under the composition scheme, and a registered person supplying only exempt goods or services, issue a bill of supply instead of a tax invoice.

No. A bill of supply does not show or collect GST, and the buyer cannot claim input tax credit on it.

A tax invoice charges GST and lets an eligible buyer claim input tax credit; a bill of supply is used when no GST can be charged, such as by composition dealers or for exempt supplies.

This guide is general information based on the CGST Rules, 2017 and the IGST Act, 2017. It is not tax or legal advice — rates, thresholds and notifications change, so confirm your situation with a chartered accountant or on the official GST portal (gst.gov.in / cbic.gov.in).