Difference Between Tax Invoice and Bill of Supply
Understand when to use a tax invoice and when to use a bill of supply under GST, with simple examples for Indian businesses.
A tax invoice is generally issued when a GST-registered supplier makes a taxable supply and charges GST. A bill of supply is generally issued when GST is not charged, such as for exempt supplies or certain cases where GST cannot be collected separately.
What is a Tax Invoice?
A tax invoice is issued for taxable supplies where GST is charged. It usually includes supplier details, GSTIN, invoice number, invoice date, customer details, description of goods or services, HSN/SAC where applicable, taxable value, GST rate, GST amount, tax breakup and total invoice value.
What is a Bill of Supply?
A bill of supply is issued where GST is not charged in the document. It may be used for exempt supplies, composition scheme cases or other situations where GST is not collected separately from the customer.
Main Difference Between Tax Invoice and Bill of Supply
- GST charged: Tax invoice shows GST charged; bill of supply generally does not.
- Used for: Tax invoice is used for taxable supplies; bill of supply is used where GST is not charged.
- Tax breakup: Tax invoice shows CGST/SGST/IGST; bill of supply does not show GST collected.
- Purpose: Both record transactions, but their GST treatment is different.
When Should a Tax Invoice Be Used?
A tax invoice is generally used when the supplier is registered under GST, the supply is taxable, GST is being charged and invoice details are needed for GST records.
Examples include a GST-registered consultant billing services, a trader selling taxable goods or a business charging IGST for interstate taxable supply.
When Should a Bill of Supply Be Used?
A bill of supply is generally used when GST is not charged. Examples may include exempt supplies or certain composition scheme situations, depending on facts and applicable GST rules.
Common Mistakes to Avoid
- Charging GST in a bill of supply.
- Using tax invoice format without GST details.
- Selecting the wrong document type.
- Missing GSTIN or place of supply details.
- Not maintaining proper invoice records.
Practical Example
If a GST-registered agency charges GST on website development services, it generally issues a tax invoice. If a supplier is issuing a document where GST is not charged due to the nature of supply or registration type, a bill of supply may be more suitable.
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FAQs
A tax invoice is generally used when GST is charged. A bill of supply is generally used when GST is not charged.
Generally, GST is not charged separately in a bill of supply.
A GST-registered supplier making taxable supplies and charging GST generally issues a tax invoice.
A bill of supply may be issued where GST is not charged, depending on GST applicability.
Yes, if the invoice tool supports GST and non-GST formats, you can create different document types based on your requirement.
Yes, Adhiniyam provides an Invoice Generator and GST support service pathway.
This article is for general informational purposes only. GST invoicing requirements may vary based on registration type, supply type, business facts, place of supply, GST law, portal process and applicable professional advice.