GST invoice vs tax invoice vs bill of supply — the difference, in plain English

Three names, three documents, and one very common ₹25,000 penalty when a business picks the wrong one. If you've ever paused before clicking "Save Invoice" and wondered which template to use, this guide is for you. I'll walk you through the definitions, side-by-side comparison, and the ten real-world scenarios I get asked about most.

The three-line answer, before we dig in

• Tax invoice (a.k.a. "GST invoice") — issued by a regular-scheme registered taxpayer when making a taxable supply. Contains GST breakup (CGST + SGST or IGST).
• Bill of supply — issued by a composition-scheme taxpayer, or by anyone supplying exempt goods/services. Contains no tax breakup.
• "GST invoice" — not a legal term. Colloquially, it means "tax invoice." Some people use it to mean "any invoice that mentions GST" but the CGST Act only recognises the first two.

1) What is a tax invoice under GST?

A tax invoice is the primary document under section 31 of the CGST Act, 2017. It is issued whenever a registered taxable person makes a taxable supply — meaning a supply on which GST is chargeable.

Rule 46 of the CGST Rules lists 16 mandatory fields for a tax invoice. Our GST invoice format guide covers each one in detail, but the non-negotiables are:

• The words "Tax Invoice" printed visibly at the top
• Consecutive serial number (max 16 characters, alphanumeric with only "-" and "/")
• Date of issue
• Supplier's name, address and GSTIN
• Recipient's name, address and GSTIN (if registered)
• HSN code for goods (or SAC for services)
• Description, quantity, unit, taxable value
• Rate and amount of tax — CGST, SGST, IGST, cess (as applicable)
• Place of supply (if inter-state)
• Whether reverse charge applies (Yes/No)
• Signature or digital signature of the supplier

People who say "GST invoice" almost always mean tax invoice. The Government of India's own GST portal documentation uses the two terms interchangeably.

2) What is a bill of supply?

A bill of supply is issued when there is no GST to charge. It looks similar to a tax invoice but with critical differences: no tax breakup, no mention of CGST/SGST/IGST, and a bold marker that says "Bill of Supply" (not "Tax Invoice") at the top.

You issue a bill of supply if you fall into any one of these three buckets:

1. You are registered under the composition scheme under section 10. Composition dealers cannot collect GST from customers, so they cannot issue a tax invoice.
2. You are a regular taxpayer supplying exempted goods or services (e.g., fresh vegetables, unpackaged rice, healthcare, education).
3. You are a regular taxpayer making a supply worth less than ₹200 to an unregistered person and the recipient does not request an invoice.

3) The head-to-head comparison table

4) Ten scenarios — which document do I issue?

1. Freelance developer in Pune bills a client in Mumbai for ₹1.2 lakh — Tax invoice. Both are Maharashtra, so 9% CGST + 9% SGST. See our GST calculation guide.
2. Same freelancer bills a client in Bengaluru — Tax invoice, IGST 18%.
3. Composition-scheme kirana shop sells rice worth ₹800 — Bill of supply. The 1% composition tax is paid out of the trader's pocket to the government; the customer pays only the ticket price.
4. Diagnostic clinic charges ₹1,500 for a blood test — Bill of supply. Healthcare services by a clinical establishment are exempt.
5. Textile trader sells fresh cotton bales (0% GST) to a mill — Bill of supply, because the supply is exempt.
6. Cafe with turnover ₹80 lakh, under composition — Bill of supply for every sale. Add "composition taxable person, not eligible to collect tax on supplies" at the bottom (mandatory).
7. Coaching institute (below the exemption threshold) sells ₹4,000 worth of stationery — Depends on whether they're GST-registered. If yes, tax invoice; if not registered, an ordinary sale voucher (not a bill of supply).
8. Photographer supplies a wedding album for ₹35,000 — Tax invoice, 18% GST on services.
9. Farmer selling own agricultural produce (potatoes) to a mandi — Neither. Sale by a farmer of primary produce is outside GST altogether; issue a simple delivery note or challan.
10. Salon owner (regular scheme) also sells a shampoo bottle — Tax invoice. GST on service (18%) and on the product (5% or 18% depending on HSN) are shown on the same tax invoice.

5) The five most common mistakes we see

• Composition dealer collecting GST — massive violation. Section 10(5) says the composition taxpayer can charge only the ticket price. If they add tax on the invoice, they lose composition eligibility and get slapped with regular-scheme rates on the entire turnover.
• "Tax Invoice" marker missing — buyer's ITC is disallowed on audit. This alone has cost more small businesses their ITC than any other error.
• Same serial number across tax invoice and bill of supply — you must maintain separate consecutive series. Overlap = penalty.
• Missing "not eligible to collect tax" line on composition invoices — Rule 5(1)(f) of the composition rules requires this exact wording on every bill.
• Bill of supply issued for a taxable item — buyer loses ITC and you may be treated as evading tax. Fix retroactively via a supplementary tax invoice within the return-filing window.

6) What about "GST invoice"?

"GST invoice" is not a formal category in law — it's how everyday users describe a tax invoice. When a customer emails you asking for a "GST invoice," they mean:

• An invoice with your GSTIN clearly printed
• CGST/SGST or IGST columns shown separately
• Their GSTIN captured so they can claim ITC

In other words — a tax invoice. If someone asks for a "GST invoice" and you are on the composition scheme, politely explain that you can only issue a bill of supply. You can share our What is an invoice? guide as a reference.

7) Related documents you'll also encounter

• Receipt voucher — for advance payments received (before the taxable event).
• Refund voucher — when the advance is later refunded because the supply didn't happen.
• Payment voucher — issued by the recipient in RCM scenarios.
• Debit note / credit note — to increase or decrease the taxable value of a previously issued invoice.
• Delivery challan — for movement of goods without a supply (job-work transfers, exhibitions, testing).
• Proforma invoice — a non-binding quotation. See our proforma invoice guide. It is never a substitute for a tax invoice.
• Invoice vs bill vs receipt — general commercial distinctions covered in this comparison.

8) Penalties for issuing the wrong document

Section 122(1) of the CGST Act 2017 imposes a penalty of ₹25,000 — or the amount of tax evaded, whichever is higher — for:

• Supplying goods or services without issuing an invoice
• Issuing an incorrect or false invoice
• Issuing an invoice without an actual supply

On top of that, the recipient loses ITC — which is often a bigger commercial cost than the fine.

Frequently asked questions

Related guides

• GST invoice format — the 14 mandatory fields
• How to calculate GST on services
• GST slab rates 2026
• How to claim Input Tax Credit (ITC)
• CBIC GST portal (official)