Direct and Indirect Taxation · Tax Invoice - Electronic Way Bill

Bill of Supply, Credit Note and Debit Note under GST

Q: What is the difference between a tax invoice and a bill of supply?

A tax invoice is issued for taxable supplies and shows the tax charged. A bill of supply is issued for exempt supplies or by a composition dealer, and no tax is charged on it. Recipients cannot claim input tax credit on a bill of supply.

Q: When is a receipt voucher issued?

When a registered person receives advance payment for a supply of goods or services. It evidences the receipt of the payment. Section 31(3)(d) makes it mandatory.

Q: When is a refund voucher issued?

If a receipt voucher was issued for an advance but no supply is made and no tax invoice follows. The supplier may then issue a refund voucher to the payer under section 31(3)(e).

Q: Is a tax invoice required for supplies under ₹200?

Not necessarily. Section 31(3)(b) says a registered person may skip the tax invoice if the value is less than ₹200, subject to prescribed conditions. The same limit applies to a bill of supply.

Q: What are credit notes and debit notes under GST?

They adjust an invoice already issued. A debit note increases the taxable value or tax, and a credit note reduces it. Check the Rules for the exact conditions and particulars.

Updated 10 October 2026 · Fact-checked

A tax invoice is issued for taxable supplies. A bill of supply replaces it for exempt supplies and for composition dealers. A receipt voucher records advance received, and a refund voucher is issued if no supply follows. Credit and debit notes adjust an invoice already issued. Match the document to the situation.

Understand Bill of Supply, Credit Note, Debit Note and Other Documents

Section 31 of the CGST Act, 2017 tells you which document to issue. The default is the tax invoice for taxable goods or services. The Act then lists exceptions in section 31(3), where a different document is issued, or none at all.

A bill of supply is issued instead of a tax invoice when a registered person supplies exempted goods or services, or pays tax under the composition scheme (section 10). It shows no tax, because no tax is charged to the recipient. This is why the recipient cannot claim input tax credit on it. Under section 16(2)(a), credit needs a tax invoice or debit note issued by a registered supplier, or other prescribed tax paying documents.

When you receive advance payment for a supply, section 31(3)(d) requires a receipt voucher. If the supply is never made and no tax invoice follows, the supplier may issue a refund voucher against that payment (section 31(3)(e)).

For reverse charge, a registered person liable under section 9(3) or 9(4) issues an invoice for goods or services received from an unregistered supplier, and a payment voucher when paying the supplier (section 31(3)(f) and (g)). The Act says an unregistered supplier includes one registered only for TDS under section 51.

Credit notes, debit notes and delivery challans are mostly dealt with in other sections and the Rules. The text supplied here does not cover them. Broadly, a debit note raises the taxable value or tax of an earlier invoice. A credit note reduces it. A delivery challan accompanies goods moved without an invoice, such as job work, approval sales or supplies in parts. Check the Rules for exact particulars and timing.

Key rules to remember

Tax invoice for goods: Issue before or at the time of removal (movement) or delivery/making available (no movement); Section 31(1). It shows description, quantity, value and tax charged.
Tax invoice for services: Issue before or after the service, within the prescribed period; Section 31(2). The period is set by the Rules.
Bill of supply: Exempt supply or composition dealer (section 10) → bill of supply, not tax invoice; Section 31(3)(c). It may be skipped if value is below ₹200, subject to conditions.
Tax invoice may be skipped: Value of supply < ₹200 → tax invoice need not be issued; Section 31(3)(b), subject to prescribed conditions and manner.
Advance receipt: Advance received → receipt voucher; Section 31(3)(d).
No supply after advance: Receipt voucher issued, no supply, no tax invoice → refund voucher may be issued; Section 31(3)(e). The word is 'may'.
Reverse charge documents: Unregistered supplier: issue invoice on receipt, payment voucher on payment; Section 31(3)(f) and (g), for persons liable under section 9(3) or 9(4).
Continuous supply of goods: Invoice before or at the time each statement of account is issued or each payment is received; Section 31(4).
Continuous supply of services: Due date ascertainable: on or before due date. Not ascertainable: before or at time of receiving payment. Linked to event: on or before event completion; Section 31(5).
Supply ceases midway: Invoice at the time supply ceases, to the extent supplied; Section 31(6).
Sale on approval: Invoice before or at the time of supply, or within six months from removal, whichever is earlier; Section 31(7).
Revised invoice on late registration: Within one month of the registration certificate date, for supplies from the effective date to the certificate date; Section 31(3)(a).

How to solve Bill of Supply, Credit Note, Debit Note and Other Documents questions

Use this method for any question asking which document applies or when it must be issued.

1Identify the supplier: regular taxable person, composition dealer, or a person liable under reverse charge.
2Identify the supply: taxable, exempt, goods or services, one-off or continuous.
3Check the trigger: is there an advance, a return or cancellation, a price change, or goods moving without sale?
4Pick the document: tax invoice, bill of supply, receipt voucher, refund voucher, payment voucher, credit note, debit note or delivery challan.
5Apply the timing rule from section 31 for that supply type.
6Check the exceptions, such as the ₹200 limit, and state that they apply subject to prescribed conditions.
7State the effect on credit: a bill of supply gives no ITC, while a tax invoice or debit note can support it under section 16(2)(a).
8Write the answer with the section number and a one-line reason.

Quickest way: Trigger-to-document map

When to use it: For MCQs and short-answer questions where you must name the document fast.

Exempt supply or composition dealer: bill of supply.
Money received before supply: receipt voucher.
Advance taken but no supply: refund voucher.
Purchase from unregistered supplier under reverse charge: self-invoice and payment voucher.
Invoice value too low or too high after issue: debit note or credit note.
Goods moving without a sale invoice: delivery challan.
Anything else taxable: tax invoice.

Common mistakes in Bill of Supply, Credit Note, Debit Note and Other Documents

Issuing a tax invoice for exempt supplies or by a composition dealer.
Students treat the tax invoice as the only sales document.
Fix: Remember section 31(3)(c): exempt supply or section 10 payer issues a bill of supply.
Saying a bill of supply allows input tax credit.
Students ignore that no tax is charged on it.
Fix: Link to section 16(2)(a): credit needs a tax invoice, debit note or other prescribed tax paying document.
Treating the refund voucher as compulsory.
Students read it as parallel to the receipt voucher.
Fix: Section 31(3)(e) says the supplier 'may' issue it. The receipt voucher in clause (d) is mandatory ('shall').
Mixing up credit note and debit note.
The names sound like bank entries.
Fix: Think from the invoice: higher value or tax means debit note, lower means credit note.
Saying invoices are never needed below ₹200.
The limit is remembered without its conditions.
Fix: Write that it is 'less than ₹200, subject to prescribed conditions and manner'. The recipient can still ask for one in practice, so do not state absolute rules.
Applying the goods timing rule to services.
Sections 31(1) and 31(2) look alike.
Fix: Goods are tied to removal or delivery. Services are tied to a prescribed period after or before provision.

Worked examples

Example 1

Sharma Traders, a registered dealer in Indore, sells exempt goods worth ₹80,000 and taxable goods worth ₹1,20,000 to a registered buyer in one month. Which documents must it issue, and can the buyer claim credit on the exempt supply?

Show the solution

Exempt supply: under section 31(3)(c), issue a bill of supply, not a tax invoice.
Taxable supply: under section 31(1), issue a tax invoice before or at removal of goods if they move, or at delivery otherwise.
Credit: section 16(2)(a) requires a tax invoice or debit note or other prescribed tax paying documents. A bill of supply carries no tax, so no input tax credit arises on the exempt goods.
Credit on the taxable supply is available only if the other section 16(2) conditions are met, including receipt of goods and the supplier's return and payment conditions.

Answer: Bill of supply for ₹80,000 exempt goods and tax invoice for ₹1,20,000 taxable goods. No credit on the bill of supply.

Example 2

On 5 June, Mehta Engineering receives ₹2,00,000 as advance for machine parts. On 20 June, the buyer cancels the order and no supply is made. State the documents the supplier should issue.

Show the solution

On receipt of advance on 5 June, section 31(3)(d) requires a receipt voucher with the prescribed particulars.
Supply is later not made, and no tax invoice is issued.
Under section 31(3)(e), the supplier may issue a refund voucher against the payment to the person who paid.
Do not issue a tax invoice, because no supply took place.

Answer: Receipt voucher on 5 June for ₹2,00,000. A refund voucher may be issued on cancellation, with no tax invoice.

Exam tips

In MCQs, key words decide the answer: exempt or composition means bill of supply. Advance means receipt voucher.
Write 'shall' for receipt voucher and 'may' for refund voucher.
Quote section 31 sub-section numbers only where sure: 31(1) goods, 31(2) services, 31(3) exceptions, 31(7) approval.
For credit and debit notes and delivery challans, use the Rules and state timing and particulars only if you know them.
In a long answer, add a line on the impact on input tax credit under section 16(2)(a).

Practice questions from Tax Invoice - Electronic Way Bill

Bill of Supply, Credit Note, Debit Note and Other Documents in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA IntermediateCredit Notes and Debit Notes

Bill of Supply, Credit Note, Debit Note and Other Documents: frequently asked questions

What is the difference between a tax invoice and a bill of supply?

A tax invoice is issued for taxable supplies and shows the tax charged. A bill of supply is issued for exempt supplies or by a composition dealer, and no tax is charged on it. Recipients cannot claim input tax credit on a bill of supply.

When is a receipt voucher issued?

When a registered person receives advance payment for a supply of goods or services. It evidences the receipt of the payment. Section 31(3)(d) makes it mandatory.

When is a refund voucher issued?

If a receipt voucher was issued for an advance but no supply is made and no tax invoice follows. The supplier may then issue a refund voucher to the payer under section 31(3)(e).

Is a tax invoice required for supplies under ₹200?

Not necessarily. Section 31(3)(b) says a registered person may skip the tax invoice if the value is less than ₹200, subject to prescribed conditions. The same limit applies to a bill of supply.

What are credit notes and debit notes under GST?

They adjust an invoice already issued. A debit note increases the taxable value or tax, and a credit note reduces it. Check the Rules for the exact conditions and particulars.