Bill of Supply vs Tax Invoice — The Core Difference
A Tax Invoice is issued when you charge GST on the supply. A Bill of Supply is issued when NO GST is charged — either because you're a composition dealer, or the goods/services are exempt from GST. The key distinction: a Tax Invoice always shows CGST/SGST or IGST amounts. A Bill of Supply shows no tax amounts and must include the phrase 'Amount of tax payable has not been charged'.
When Must You Issue a Bill of Supply?
Scenario 1 — Composition Dealer: If you've opted for the Composition Scheme (CGST), you cannot collect GST from customers. You must issue a Bill of Supply, NOT a Tax Invoice. Collecting GST as a composition dealer is a violation. Scenario 2 — Exempt Supplies: If your goods or services are GST-exempt (like fresh vegetables, books, medical services), you cannot charge GST. Bill of Supply is mandatory. Scenario 3 — Nil-Rated Supplies: Goods taxed at 0% also require a Bill of Supply in some cases. Scenario 4 — Unregistered Supplier: If your turnover is below the GST threshold and you're not registered, you issue a Bill of Supply.
Mandatory Fields in a Bill of Supply
Name, address, and GSTIN of supplier. Bill of Supply number (must be sequential). Date of issue. Name and address of recipient. Description of goods/services supplied. Value of supply. HSN/SAC code (where applicable). The phrase: 'Amount of tax payable has not been charged'. Note: Unlike a Tax Invoice, a Bill of Supply does NOT need the recipient's GSTIN for GST purposes.
Composition Scheme — Quick Overview
Under the GST Composition Scheme, eligible small businesses (turnover up to ₹1.5 Crore for goods, ₹50 Lakhs for services) pay a flat GST rate (1-5% depending on type) on their turnover — directly to the government. They cannot collect GST from customers. Benefits: Simplified compliance (quarterly returns), lower tax rate. Limitation: Cannot issue Tax Invoices, cannot claim ITC, cannot supply to other states in most cases.
How to Create a Bill of Supply Free
In Techfied Invoicer: When creating a new invoice, select document type 'Bill of Supply' instead of 'Tax Invoice'. The system automatically removes tax fields and formats the document as per GST requirements. You get the same professional PDF, WhatsApp sharing, and UPI payment link — just without GST amounts. Free plan includes 10 Bills of Supply per month.
Common Mistakes with Bill of Supply
Issuing a Tax Invoice when you should issue a Bill of Supply (composition dealers do this often). Writing 'Bill of Supply' at the top but still showing GST amounts — these documents are invalid. Not mentioning 'Amount of tax payable has not been charged'. Using a composition dealer's invoice number sequence for Bills of Supply — they must be in a separate series. Issuing a Bill of Supply for inter-state sales as a composition dealer (generally not allowed — get CA advice for your specific case).