The difference between a tax invoice and a bill of supply is simple: a tax invoice is the bill you raise for a taxable sale and it shows the GST you charged; a bill of supply is the bill you raise when no GST is charged — for exempt or nil-rated goods, or when you are registered under the composition scheme. This guide explains when a small shop issues each document, what changes between them, and shows a kirana example so you can tell them apart at the counter.
Tax invoice vs bill of supply: the quick answer
| Tax invoice | Bill of supply | |
|---|---|---|
| Issued for | Taxable goods/services | Exempt or nil-rated goods; composition dealers |
| GST shown | Yes — CGST + SGST, or IGST | No tax rate, no tax amount |
| Who issues | Any registered seller, on taxable sales | Registered seller on exempt sales; composition dealers |
| Item details (HSN, qty, value) | Yes | Yes |
| Buyer can claim input tax credit | Yes (if registered) | No — there is no tax to claim |
The heading on the document is different too: one says Tax Invoice, the other says Bill of Supply. Getting the right heading on the right sale is what keeps your records clean at return time.
When to issue a tax invoice
Under the GST rules, a registered person issues a tax invoice for every taxable supply of goods or services (see Section 31 of the CGST Act on cbic.gov.in). It carries your shop’s GSTIN, a unique invoice number, the buyer’s details, each item’s HSN and value, and the tax charged — split as CGST + SGST for a sale within your state, or a single IGST for an inter-state sale. This is the bill most retail shops raise all day.
When to issue a bill of supply
You issue a bill of supply when you are not allowed to charge GST on the sale. There are two common cases for a small shop:
- Exempt or nil-rated goods. Many everyday items — for example loose, unbranded foodgrains — are exempt or nil-rated. Confirm the current status of each item on gst.gov.in or with your CA, because classifications change.
- Composition dealers. A dealer registered under the composition scheme cannot collect GST from customers, so every sale goes on a bill of supply. Such a bill must carry the words “Composition taxable person, not eligible to collect tax on supplies” — a composition dealer never charges tax on the bill.
A bill of supply looks a lot like a tax invoice — same shop identity, a unique serial number, the buyer’s details, the item description and HSN, and the value — but it has no tax rate and no tax amount, because there is no GST to add (the particulars are set out in the CGST Rules on cbic.gov.in).
A worked example: one kirana, two documents
Ravi runs a registered provision store in Coimbatore, Tamil Nadu. In a single morning he serves two customers.
Customer 1 buys 5 kg of loose, unbranded atta at ₹40/kg. This is a nil-rated food item, so Ravi issues a bill of supply:
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RAVI PROVISION STORE GSTIN: 33ABCDE1234F1Z5
BILL OF SUPPLY No: BOS2026-27/0007 Date: 17/07/2026
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Item HSN Qty Rate Value
Atta (loose) 1101 5 kg 40.00 200.00
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TOTAL: ₹ 200.00
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(No GST charged — exempt/nil-rated goods)
Customer 2 buys one bar of soap for ₹100 (taxable). Since it is a within-state sale, Ravi issues a tax invoice and splits the GST into CGST + SGST. Using an illustrative 18% rate (confirm the current rate for your goods):
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RAVI PROVISION STORE GSTIN: 33ABCDE1234F1Z5
TAX INVOICE No: INV2026-27/0042 Date: 17/07/2026
Place of supply: Tamil Nadu (33)
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Item HSN Qty Taxable GST Amount
Soap 3401 1 100.00 18% 118.00
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Taxable value: 100.00
CGST 9%: 9.00
SGST 9%: 9.00
TOTAL: ₹ 118.00
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Same shop, same morning — but the exempt sale gets a bill of supply with no tax, and the taxable sale gets a tax invoice with the CGST + SGST split. Numbering each series separately (BOS… and INV…) keeps them tidy.
What if a customer buys both at once?
For a sale to an unregistered walk-in customer that mixes taxable and exempt items, the rules allow a single combined document — an “invoice-cum-bill of supply” — instead of two separate bills. It is a genuine convenience for kirana counters, but treatment can change, so confirm the current position on gst.gov.in or with your CA before relying on it.
Small-value sales
Just as a tax invoice need not be issued for very small taxable sales to unregistered buyers (commonly cited as below ₹200, subject to conditions), similar relief exists for a bill of supply. Treat ₹200 as a rule of thumb only and confirm the current threshold on gst.gov.in / with your CA, since these limits are revised from time to time.
FAQ
What is the difference between a tax invoice and a bill of supply? A tax invoice is for taxable sales and shows the GST charged (CGST + SGST or IGST). A bill of supply is for exempt or nil-rated goods, or for a composition dealer, and charges no GST.
Can I issue both from the same shop? Yes. A normally-registered seller raises a tax invoice for taxable goods and a bill of supply for the exempt goods they also sell.
Does a bill of supply need an HSN code? Yes — it carries the same item details, including HSN, but no tax rate or amount.
Getting the right bill, every time
The hard part isn’t knowing the rule — it’s applying it correctly on every sale, at counter speed, with clean numbering for each series. Yojika is offline-first GST billing software for Indian small shops: its tax engine handles the CGST/SGST/IGST split automatically from the place of supply, keeps your invoice numbers unique and consecutive through the financial year, and prints to A4, A5, or a thermal receipt printer in all 22 official Indian languages. Your data stays on your own PC.
Yojika is built for regular GST tax invoices. It does not cover the composition scheme, e-way bills, or exempt-only billing flows — those stay out of scope, so check with your CA if your shop needs them.
- See what’s included on the features page.
- Compare simple, transparent plans on the pricing page.
- Or download Yojika and try it free for 14 days.
New to GST bills? Start with our guide to the GST invoice format for small shops.
This article is general information, not tax advice. GST rules, rates and thresholds change — confirm the current position on gst.gov.in or with your CA.