Bill of Supply Under GST: Format, Rules and When to Issue One

Quick answer: A bill of supply under GST is the document a registered business issues instead of a tax invoice when it cannot charge GST: either because it is a composition dealer or because the goods or services are exempt. It follows the format in rule 49 of the CGST Rules, shows no tax, and gives the buyer no input tax credit.

Most GST guidance focuses on the tax invoice, but thousands of small shops, restaurants and service providers never issue one. If you are in the composition scheme, or you sell exempt items like fresh produce, the law requires a bill of supply instead. This guide covers who must issue one, the required particulars, the composition declaration, how it differs from a tax invoice, sample formats and a worked example. For the full tax invoice rules, see our GST invoice guide. You can create either document with our free invoice generator by leaving the tax lines out.

This article is general information as of 2026, not tax or legal advice. Check the current CGST Act and Rules or speak to a chartered accountant before you rely on it.

What is a bill of supply in GST?

Section 31(3)(c) of the CGST Act says a registered person supplying exempted goods or services, or paying tax under the composition scheme in section 10, shall issue a bill of supply instead of a tax invoice. The format is set by rule 49 of the CGST Rules.

The point of the document is to record the sale under your GSTIN without charging tax. It works as a sales invoice for your accounts, gives the customer proof of purchase, and supports the turnover you report to the GST department. What it never does is pass input tax credit to the buyer.

Who must issue a bill of supply

1. Composition scheme taxpayers

Businesses that opt into the GST composition scheme pay tax at a flat rate on turnover and cannot collect tax from customers. Every sale they make is billed on a bill of supply. The CBIC FAQ and GST Council flyer on the scheme summarise the main features, and the current combined rates are:

Category	Composition rate (CGST + SGST)	Turnover limit (preceding year)
Manufacturers (other than notified goods)	1% (0.5% + 0.5%)	Rs 1.5 crore (Rs 75 lakh in special category states)
Traders	1% of turnover of taxable supplies (0.5% + 0.5%)	Rs 1.5 crore (Rs 75 lakh in special category states)
Restaurants not serving alcohol	5% (2.5% + 2.5%)	Rs 1.5 crore (Rs 75 lakh in special category states)
Service providers under section 10(2A)	6% (3% + 3%)	Rs 50 lakh

The GST Council flyer on the composition levy scheme explains the eligibility conditions, including that composition dealers generally cannot make inter-state outward supplies or sell through e-commerce operators that collect tax at source.

2. Regular taxpayers selling exempt supplies

A regular GST-registered business that sells exempt or nil-rated goods or services issues a bill of supply for those sales. Examples include fresh fruit and vegetables, many health care and education services, and, after the GST 2.0 changes from 22 September 2025, several items moved to nil rate, such as UHT milk, paneer and Indian breads, and individual life and health insurance policies. Our guide to GST 2.0 new GST rates lists the changes. Exports are different: they are zero-rated, not exempt, and go on a tax invoice under an LUT in GST.

3. Who does not issue one

An unregistered business is outside GST billing altogether. It issues a plain bill or cash memo without a GSTIN and must not show any GST.

Bill of supply format: required particulars under rule 49

Rule 49 lists the details a bill of supply must contain:

1. Name, address and GSTIN of the supplier.
2. A consecutive serial number, up to 16 characters, using letters, numbers, hyphens or slashes, unique for the financial year. A simple invoice number generator helps keep the series clean.
3. Date of issue.
4. Name, address and GSTIN or UIN of the recipient, if registered.
5. HSN code of goods or SAC of services, as applicable to your turnover.
6. Description of the goods or services.
7. Value of the supply, taking into account any discount or abatement.
8. Signature or digital signature of the supplier or an authorised representative. A bill of supply issued electronically under the IT Act, 2000 does not need a signature.

Rule 49 also says that a tax invoice or similar document issued under another law for a non-taxable supply is treated as a bill of supply.

The composition dealer declaration

Rule 5 of the CGST Rules requires a composition taxpayer to mention the words "composition taxable person, not eligible to collect tax on supplies" at the top of the bill of supply. The same words, in substance, must appear on the signboard at the place of business. Leaving them off is one of the most common inspection findings for small shops.

Small sales under Rs 200

The proviso to section 31(3)(c) allows a registered person not to issue a bill of supply for a sale worth less than Rs 200, where the buyer is unregistered and does not ask for a bill. The supplier then issues one consolidated bill of supply for all such sales at the close of each day.

Bill of supply vs tax invoice

Point	Bill of supply	Tax invoice
Issued by	Composition dealers; regular taxpayers for exempt supplies	Regular taxpayers for taxable supplies
GST charged	None	CGST and SGST, or IGST
Buyer's input tax credit	Not available	Available if conditions are met
Governing rule	Section 31(3)(c), rule 49	Section 31(1) and (2), rule 46
Special wording	Composition declaration for composition dealers	Reverse charge or export endorsements where relevant
Reported in	CMP-08 and GSTR-4 (composition) or GSTR-1 (exempt sales)	GSTR-1 and GSTR-3B

A related distinction is between a tax invoice and a retail invoice, which is covered in our guide to tax invoice vs retail invoice. For non-GST contexts, our tax-exempt invoice guide explains how other countries handle supplies without tax.

Invoice-cum-bill of supply

Sometimes a regular business sells taxable and exempt items together, such as a grocer selling packaged biscuits and fresh vegetables in one sale. Rule 46A allows a single invoice-cum-bill of supply when the buyer is unregistered. It must contain the particulars of both rule 46 and rule 49, with GST shown only on the taxable lines.

How to create a bill of supply step by step

1. Confirm why no GST applies. Either you are a composition taxpayer, or the item is exempt or nil-rated. If neither is true, you need a tax invoice.
2. Add your header details: business name, address, GSTIN and, for composition dealers, the declaration at the top.
3. Set the number and date from a dedicated series for the financial year.
4. Enter the buyer's details, including their GSTIN if they are registered.
5. List each item with its HSN or SAC code, description, quantity, rate and value after discount.
6. Total the bill without any tax lines. Do not write "GST included", since composition dealers cannot collect tax.
7. Sign it, or issue it electronically, and keep a copy in your records.

Sample bill of supply

Here is how the key parts of a composition trader's bill of supply might look:

Field	Entry
Top line	BILL OF SUPPLY: composition taxable person, not eligible to collect tax on supplies
Supplier	Sharma Hardware, Main Road, Indore, GSTIN 23XXXXXXXXXXXZX
Bill number and date	BOS/26-27/0418, 14 October 2026
Buyer	R. K. Builders, Indore (GSTIN if registered)
Line 1	Wall putty, 20 kg bags, HSN code, 50 bags at Rs 500 = Rs 25,000
Line 2	Paint brushes, HSN code, 100 at Rs 150 = Rs 15,000
Total	Rs 40,000 (no GST charged)
Footer	Authorised signatory

For layout ideas, the minimal invoice template works well because it does not force tax columns. Our guide to bill formats shows more layouts.

Worked example: what a composition trader actually pays

Sharma Hardware is a composition trader. In the July to September 2026 quarter it issues bills of supply totalling Rs 12,00,000, all taxable goods sold within Madhya Pradesh.

• Composition tax at 1% of Rs 12,00,000 = Rs 12,000, made up of Rs 6,000 CGST and Rs 6,000 SGST.
• This is paid from the business's own money through the quarterly CMP-08 statement, because no tax was collected from customers.
• Sharma Hardware cannot claim input tax credit on its purchases, so GST paid to its own suppliers is part of its cost of goods.

Now compare a regular trader selling the same goods at an 18% rate. It would charge customers Rs 2,16,000 of GST on Rs 12,00,000 of sales and set off its input tax credit against that. If its purchases were Rs 9,00,000 plus Rs 1,62,000 of GST, it would pay Rs 2,16,000 minus Rs 1,62,000 = Rs 54,000 in cash, all of it collected from customers. The composition trader pays far less in cash, but its business customers cannot claim any credit. That trade-off is the core of the decision, which our guide to input tax credit under GST explores further.

Common bill of supply mistakes

• Showing GST on a composition bill. Even a line saying "GST 1%" suggests tax was collected, which a composition dealer is not allowed to do.
• Missing the composition declaration at the top of the bill, or on the signboard.
• Using a bill of supply for taxable sales by a regular dealer. If the item carries GST, the buyer is entitled to a tax invoice.
• Mixing series. Keep bills of supply in a clear, consecutive series for the financial year, separate from any tax invoices you issue, and never reuse a number.
• Leaving out the buyer's GSTIN when they are registered, which makes your records harder to reconcile.
• Treating exports as exempt. Exports are zero-rated and need a tax invoice, not a bill of supply.
• Forgetting the GST 2.0 changes. Items that moved to nil rate from 22 September 2025 now go on a bill of supply, while items that moved the other way need a tax invoice.

Returns, records and penalties

Composition taxpayers file CMP-08 every quarter to pay tax and GSTR-4 as an annual return. Regular taxpayers report exempt and nil-rated sales on bills of supply in GSTR-1 and GSTR-3B; see GSTR-1 vs GSTR-3B for where each figure goes. Keep copies of every bill of supply for the period required under the GST law, generally 72 months from the due date of the annual return; our guide on how long to keep invoices covers record keeping more widely.

Issuing a document that charges GST when you are in the composition scheme, or failing to issue any bill, can attract penalties under the CGST Act, and any tax collected must still be paid over to the government.

Create your bill of supply

A bill of supply under GST is simple once you know the rules: no tax lines, the rule 49 particulars, and, for composition dealers, the declaration at the top. Use our free invoice generator to create a clean bill of supply with your GSTIN, HSN codes and serial numbering, then download it as a PDF to print or share.