A bill of supply is the document a registered person must issue under Section 31(3)(c) of the CGST Act, 2017, instead of a tax invoice, when supplying exempted goods or services or when paying tax under the composition scheme (Section 10). Rule 49 of the CGST Rules prescribes its contents: supplier name, address and GSTIN, a consecutive serial number, date, recipient details, HSN or SAC, description, value and signature. It shows no tax, and the recipient cannot claim input tax credit on it.
How a bill of supply works in India
Suppliers of exempt goods (for example certain unprocessed agricultural produce, or some educational and healthcare services) and composition dealers (small taxpayers paying a flat rate on turnover, up to the scheme's turnover limit) issue bills of supply rather than tax invoices. The document is serially numbered and reported in the supplier's GST returns in the appropriate table. A supplier making both taxable and exempt supplies to the same buyer may issue a single "invoice-cum-bill of supply". Payment terms, PO references and interest clauses can appear on a bill of supply exactly as on a tax invoice.
Why it matters for getting paid
Buyers sometimes argue that a bill of supply is "not a proper invoice". It is the proper document for that supply, and the Contract Act, the Limitation Act and the MSMED Act apply to the debt regardless of GST treatment. What changes is the evidence trail: there is no ITC for the buyer and no GSTR-2B match, so the supplier must rely more on delivery proof, e-way bills (required above ₹50,000 even for exempt goods in many cases) and ledger confirmations. Compare the tax invoice.
How FundRaksha uses it
FundRaksha treats bills of supply like any other sale document and builds the delivery and acceptance evidence around them. Many of the 1,000+ businesses FundRaksha works with are composition dealers and agri suppliers; the fee is 30% of recovery and the first consultation is free.
Worked example (hypothetical)
A Nashik grape grower-trader registered under the composition scheme supplies ₹4,50,000 of produce to a Mumbai exporter on bills of supply, with weighment slips and lorry receipts, payment "within 15 days" written on each bill and accepted by email. Payment is three months late. As a composition dealer trading in produce it does not qualify for Samadhaan, so the claim is contractual: ₹4,50,000 plus interest. With no agreed rate, the notice demands interest under the Interest Act at 12% from the due dates, about ₹13,500 for three months (₹4,50,000 × 12% × 3/12). The exporter pays the principal within the notice period.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.