A bill of supply is the GST document for a sale on which no tax is charged. It records the sale for both sides and shows that the supplier is not collecting GST, either because the goods or services are exempt or because the supplier is under the composition scheme. Section 31(3)(c) of the CGST Act requires it, and rule 49 of the CGST Rules sets out its contents.
01Who issues a bill of supply
| Supplier | When |
|---|---|
| A composition dealer | For every sale, taxable or not |
| A regular taxpayer supplying exempt goods | For the exempt sales, such as fresh vegetables or unpacked grain |
| A regular taxpayer supplying exempt services | Such as a clinic's healthcare services or a school's education services |
A regular taxpayer making only taxable sales never issues one.
02What it must show
Rule 49 asks for:
- your name, address and GSTIN,
- a consecutive serial number of up to 16 characters, unique for the financial year,
- the date of issue,
- the buyer's name, address and GSTIN, if registered,
- the HSN code for goods or the SAC for services,
- a description of the goods or services,
- the value, after any discount,
- your signature or digital signature.
There is no tax column, because no tax is charged.
The composition dealer's wording
A composition dealer must print the words "COMPOSITION TAXABLE PERSON, NOT ELIGIBLE TO COLLECT TAX ON SUPPLIES" at the top of every bill of supply. Composition dealers must also display "composition taxable person" on the signboard at their place of business.
03Worked examples
A composition dealer
A hardware shop in Indore under the composition scheme sells hinges, screws and a padlock to a carpenter.
| Item | HSN | Quantity | Value |
|---|---|---|---|
| Butt hinges 4 inch | 8302 | 6 pairs | ₹720 |
| Wood screws 1 inch | 7318 | 2 boxes | ₹240 |
| Padlock 50 mm | 8301 | 1 | ₹350 |
| Total | ₹1,310 |
The bill shows ₹1,310 and no tax. The shop pays its 1% composition tax on its quarterly turnover through CMP-08. The carpenter, even if registered, cannot claim credit.
Exempt goods
A Nashik trader sells fresh onions worth ₹45,000 to a registered hotel. Fresh vegetables are exempt, so the trader, who is registered because it also sells taxable packaged goods, issues a bill of supply for the onions.
Exempt services
A Pune clinic's consultation and treatment fees are healthcare services, which are exempt. It issues bills of supply to patients. If the same clinic sells cosmetic products over the counter, those are taxable and need a tax invoice.
04Mixed sales: the invoice-cum-bill of supply
When a registered person sells both taxable and exempt goods or services to an unregistered buyer in one transaction, rule 46A allows a single document, the invoice-cum-bill of supply. It shows tax on the taxable items and no tax on the exempt ones.
A Varanasi grocer selling fresh vegetables and packaged namkeen to a household customer can issue one document, with GST on the namkeen only. To a registered restaurant buying the same items, it issues two documents: a tax invoice for the namkeen and a bill of supply for the vegetables.
05Small sales
The rules allow a supplier to skip a bill of supply for sales below ₹200 to unregistered buyers who do not ask for one, and to issue one consolidated document for the day's such sales. A tea stall or a vegetable seller registered for other reasons commonly works this way.
06In your returns
| Return | Where bills of supply go |
|---|---|
| GSTR-1 (regular taxpayer) | Table 8, nil-rated, exempt and non-GST supplies, and Table 13 for the documents issued |
| GSTR-3B (regular taxpayer) | Table 3.1(c), nil-rated and exempt supplies |
| CMP-08 (composition dealer) | Turnover for the quarter, on which composition tax is paid |
07Common mistakes
- Charging GST on a bill of supply. A composition dealer who shows tax must pay it to the government, and still cannot pass credit to the buyer.
- Issuing a tax invoice for exempt goods with a 0% line. Use a bill of supply.
- Leaving out the composition wording. It is required on every bill.
- No serial number, or one shared with tax invoices so that numbers repeat.
08For growing businesses
A shop that leaves the composition scheme in the middle of a year, because its turnover crosses the limit, switches from bills of supply to tax invoices from that day. Start a new series for tax invoices so the two are never mixed.
09For the buyer
A buyer who receives a bill of supply has no tax to claim. If the buyer is registered under the regular scheme, these purchases are reported in Table 5 of GSTR-3B, as inward supplies from composition dealers and exempt and nil-rated supplies. They do not appear in GSTR-2B as credit.
A Surat garment unit that buys thread from a composition dealer pays the full bill as cost. Over a year, that difference can decide which supplier it prefers, and composition dealers selling to businesses lose orders for this reason.
10Setting up your billing
- Keep a separate series for bills of supply if you also issue tax invoices, such as BOS/26-27/0001.
- Print the composition wording on the bill format itself, so it is never left out.
- Show the HSN or SAC on every line, and keep units consistent.
- Where you sell mixed items to consumers, set up the invoice-cum-bill of supply so the tax and no-tax lines sit on one document.
11When a bill of supply is not enough
Some buyers need more than a bill of supply. A registered contractor buying taxable goods wants a tax invoice for credit, and a composition dealer cannot give one. A government department may ask for a GSTIN on every bill. If a large part of your sales go to such buyers, the composition scheme is worth reconsidering.
This guide is general information as of October 2026 and does not amount to tax advice.