Many small shops register under GST's composition scheme because it means a flat tax on turnover and simple quarterly filing. The catch: a composition dealer can't collect GST from customers. That changes the bill you hand over.
The short answer
| Tax invoice | Bill of supply | |
|---|---|---|
| Who issues it | Regular GST registered businesses | Composition dealers, and sellers of exempt goods or services |
| Shows GST? | Yes, CGST + SGST or IGST | No tax amount at all |
| Customer can claim input tax credit? | Yes | No |
| Rule | CGST Rule 46 | CGST Rule 49 |
What is a bill of supply?
A bill of supply is the document a registered person issues when no GST can be charged on the sale. It records the sale just like an invoice, but it has no tax columns.
You issue it if:
- you're registered under the composition scheme (section 10 of the CGST Act), or
- everything you sell is exempt from GST, such as fresh fruit and vegetables, unbranded cereals or certain educational services.
The bill of supply format (Rule 49)
A bill of supply must show:
- Your name, address and GSTIN.
- A consecutive serial number of up to 16 characters, unique for the financial year.
- The date of issue.
- The customer's name, address and GSTIN, if they're registered.
- HSN code or SAC.
- A description of the goods or services.
- The value of the supply after any discount.
- Your signature or digital signature.
The declaration composition dealers must print
A composition dealer must print this line on every bill of supply, normally at the top:
"Composition taxable person, not eligible to collect tax on supplies"
Composition dealers must also display "composition taxable person" on the signboard at the shop.
Common mistakes
- Writing "Tax Invoice" at the top. A composition dealer issuing a "tax invoice" with GST shown is collecting tax it isn't allowed to collect.
- Adding GST to the price. Composition tax comes out of your own pocket, worked out on your turnover. Don't put it on the customer's bill.
- Skipping the declaration. The bill is incomplete without it.
- Mixing number series. Keep bills of supply in their own series, for example
BOS/2026-27/0001, so your records are easy to check.
Small sales and end-of-day bills
For sales below ₹200 to an unregistered customer who doesn't ask for a bill, you can issue one consolidated bill of supply for all such sales at the end of the day. Many shops still give a bill every time, because customers expect one.
What if you leave the composition scheme?
From the date you become a regular taxpayer, you issue tax invoices and charge GST. Start a new invoice series from that date so the two kinds of documents don't mix.
Making bills of supply in SmartRaseed
Turn on Composition scheme in your business profile. From then on, SmartRaseed creates bills of supply instead of tax invoices. They're numbered BOS/2026-27/0001 onwards, show no GST, and carry the declaration automatically. Turn it off if you move to regular GST, and new documents become tax invoices again.
