In this article you will learn:
Section 31 of the CGST Act makes it mandatory for the taxpayers registered under GST to issue a tax invoice for the supply of goods and services made by them.
Tax invoice is nothing but a commercial instrument that acts as an evidence of sale showcasing details such as description of goods or services to be sold, value of goods and services, the amount of tax charged, applicable GST rates etc.
However, there are certain registered businesses who cannot charge GST on the tax invoice issued by them. This is because they are either supplying goods or services exempt under GST or cannot collect GST from the customers as per section 10 of the CGST Act, 2017.
Hence, such businesses are required to issue Bill of Supply in place of a Tax Invoice under GST. This article explains what is Bill of Supply in GST, who can issue Bill of Supply, its components and Bill of Supply Format.
What is Bill of Supply?
As per section 31(3) of the CGST Act, 2017, a registered taxable person supplying exempted goods or services under GST or paying tax under Composition Scheme as per section 10 of the Act must issue Bill of Supply in place of a tax invoice.
Much like the Tax Invoice, a Bill of Supply acts as a proof of sale undertaken by the registered taxpayer containing details such as description of goods or services, value of supply, etc.
But, tax invoice is issued when a registered taxpayer supplies goods or services on which GST is applicable and such tax information is reflected in the tax invoice. Whereas, a Bill of Supply is issued when GST is not applicable on the goods or services supplied by the registered supplier to the recipient.
Thus, Bill of Supply does not reflect any tax information.
However, it must be noted that a registered taxpayer is not required to issue a Bill of Supply if the value of supply is less than Rs 200.
Who Can Issue Bill of Supply?
Following registered taxpayers can issue Bill of Supply under GST. These include:
Composition dealers supplying goods or services cannot collect tax from the recipient of such goods and services under GST. This is because they are are required to pay GST to the government on their own at a fixed rate as prescribed by the GST law.
Since the composition dealers cannot collect tax from the recipients, they are also not entitled to avail ITC on such supplies.
Accordingly, an invoice issued by composition dealers for goods and services supplied does not contain any tax information as they cannot collect tax from the recipients. Therefore, composition dealers are required to issue a Bill of Supply in place of a tax invoice under the GST regime.
Who Can Register as Composition Dealer Under GST?
Taxpayers supplying goods whose aggregate annual turnover is upto Rs 1.50 Crores can register as composition dealers under the GST regime as per section 10 of the CGST Act, 2017.
The registration turnover limit for composition dealers in case of supplier of goods was increased from Rs 1 Crore to Rs 1.5 Crore in 32nd GST meeting and came into effect from April 1, 2019.
Likewise, restaurant service providers having an aggregate annual turnover of upto Rs 1.50 Crore can opt for Composition Scheme under GST. This registration limit for aggregate annual turnover was increased from Rs 1 Crore to Rs 1.50 Crores in 32nd GST Council Meeting.
Furthermore, service providers other than the ones providing restaurant services could not opt for Composition Scheme under the original GST framework.
However, as per 32nd GST Council Meeting, such other service providers having an aggregate annual turnover of upto Rs 50 Lakhs can now opt for Composition Scheme under GST.
Suppliers Supplying Exempt Goods or Services
As per section 11 of the CGST Act, 2017, exempt supplies refer to:
- Supply of goods or services that attract zero per cent or nil rate of tax,
- Supplies that are wholly or partly exempted from tax or
- Non-taxable goods or services
Accordingly, no tax is charged on the outward supply of goods or services made by the registered taxpayers. However, the inward supplies received by such a taxpayer are taxed under GST.
Since outward supplies are exempted from GST, taxpayers supplying exempted goods or services cannot avail ITC on such exempted supplies.
Therefore, since exempt supplies do not attract GST, the invoice issued by the suppliers of exempted goods or services does not reflect any tax information. Hence, such taxpayers are required to issue Bill of Supply in place of a tax invoice.
Components of Bill of Supply
Registered suppliers required to issue Bill of Supply under GST as per section 31(3)(c) of the CGST Act must capture the following particulars in the Bill of Supply:
- Name, address and GSTIN of the supplier
- A consecutive serial number not exceeding 16 characters, in one or multiple series, containing letters or numerals or special characters (hyphen or dash and slash symbolised as “-” and “/” respectively) and any combination thereof, unique for a financial year.
- Date of its issue.
- Name, address and GSTIN or UIN, if registered, of the recipient.
- HSN Code of goods or Accounting Code of services.
- Description of goods or services.
- Total value of supply of goods or services or both taking into account discount or abatement, if any.
- Signature or digital signature of the supplier or his authorized representative.