# Bill of Supply: Composition or Unregistered, Which Variant Do You Issue?

**Category:** Tax Guide | **Published:** 2026-05-15 | **Last reviewed:** 2026-06-25 | **Author:** Mrs. Swapna Patel

Rule 49 of the CGST Rules 2017 requires a Bill of Supply (not a tax invoice) when GST is not collected on the supply, either because the supplier is below the GST registration threshold (Rs. 40 lakh goods / Rs. 20 lakh services) or because the supplier is on the Composition scheme under Section 10. Composition-scheme BoS must carry the Rule 49(2)(b) declaration ("Composition taxable person, not eligible to collect tax on supplies"); unregistered-seller BoS carries the supplier's PAN in place of a GSTIN. Buyers cannot claim Input Tax Credit against either variant; that is the defining difference from a pakka bill.

> **Myth:** A Bill of Supply can replace a tax invoice on any sale to keep paperwork simple.
>
> **Fact:** A registered person making taxable supplies above Rs. 50,000 must issue a tax invoice under [Section 31](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act); a BoS issued in its place invalidates the buyer's Input Tax Credit.

## Who has to issue a Bill of Supply instead of a tax invoice?

> **Short answer:** Any supplier who does not collect GST on the supply issues a Bill of Supply under [Rule 49 of the CGST Rules 2017](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended), not a tax invoice.

- Composition-scheme registrants under [Section 10](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) issue a BoS because they cannot collect GST from buyers.
- Suppliers below the registration threshold under [Section 23](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) issue a BoS because they have no GSTIN to collect GST against.
- Registered suppliers issuing exempt-supply lines under Section 31(3)(c) issue a BoS for those lines.
- The buyer-side consequence is identical across all three: no Input Tax Credit, so the GST element stays on the buyer's P&L.

**[Generate a compliant Bill of Supply in under 60 seconds](https://hrareceipt.in/bill-of-supply)**

## What is the difference between the composition variant and the unregistered variant?

> **Short answer:** The composition BoS shows a GSTIN plus the mandatory [Rule 49(2)(b)](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended) declaration; the unregistered BoS shows the supplier's PAN in place of a GSTIN.

The composition supplier pays a flat turnover tax under Section 10 but absorbs it; it never appears on the BoS. The unregistered supplier pays nothing, sitting outside the GST net entirely.

| Axis | Composition (Section 10) | Unregistered (Section 23) |
| --- | --- | --- |
| Statutory basis | Section 10 composition scheme | Section 23, below registration threshold |
| Identifier on document | GSTIN | PAN in place of GSTIN |
| Supplier GST cost | Flat turnover tax: 1% traders, 5% restaurants without alcohol, 6% services | None; outside the GST net |
| Rule 49(2)(b) declaration | Mandatory verbatim | Not applicable |
| Buyer Input Tax Credit | Zero | Zero |

*Composition vs unregistered Bill of Supply. Source: Section 10 + Section 23, CGST Act 2017 and Rule 49, CGST Rules 2017.*

**[Composition scheme vs regular GST, side by side](https://hrareceipt.in/atlas/composition-scheme-vs-regular-gst)**

## What are the turnover thresholds for each variant?

> **Short answer:** Composition under [Section 10](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) runs up to Rs. 1.5 crore aggregate turnover (Rs. 75 lakh in special-category states); the unregistered route under [Section 23](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) applies below Rs. 40 lakh for goods or Rs. 20 lakh for services.

- Exclusive suppliers of goods stay outside registration below Rs. 40 lakh aggregate turnover.
- Service suppliers and mixed suppliers stay outside registration below Rs. 20 lakh.
- The composition scheme caps eligibility at Rs. 1.5 crore aggregate turnover, or Rs. 75 lakh in special-category states.
- A supplier crossing the threshold mid-year switches variant: to composition if they elect Section 10, or to a pakka bill if they register as a regular taxpayer.

**[GST registration thresholds, mapped for 2026](https://hrareceipt.in/atlas/gst-registration-thresholds-2026)**

## What does Rule 49(2) require on the document, field by field?

> **Short answer:** [Rule 49(2) of the CGST Rules 2017](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended) lists eight mandatory fields; a BoS missing any one is technically deficient and can be questioned at audit.

- Name, address, and GSTIN of the supplier (or PAN, where unregistered).
- A consecutive serial number, maximum 16 characters, unique per financial year; a slash or hyphen counts toward the 16-character limit.
- Date of issue, plus name, address, and GSTIN of the recipient (GSTIN mandatory only if the recipient is registered).
- HSN for goods or SAC for services; four-digit HSN is acceptable below the Rs. 5 crore turnover threshold.
- Description of goods or services, and value of supply net of discount or abatement.
- Signature or digital signature of the supplier or authorised representative.

**[Auto-render all eight fields plus the declaration](https://hrareceipt.in/bill-of-supply)**

## What exactly is the Rule 49(2)(b) declaration and when is it required?

> **Short answer:** On every composition-scheme BoS the [Rule 49(2)(b)](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended) declaration "Composition taxable person, not eligible to collect tax on supplies" is mandatory verbatim, regardless of supply value.

- The declaration sits separately from the eight mandatory fields, under sub-rule (2)(b).
- It appears only on the composition variant; the unregistered variant carries no such declaration.
- Its absence is the single most common defect flagged in composition-scheme audits, independent of any tax question.
- On our generator the declaration text is editable with a reset-to-statutory-default control, so wording adjusts without losing the canonical Rule 49(2)(b) language.

## When does a Bill of Supply NOT replace a tax invoice?

> **Short answer:** A registered person making taxable supplies above Rs. 50,000 must issue a pakka bill under [Section 31](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act), not a BoS.

- A registered supplier issuing a BoS in place of a tax invoice invalidates the buyer's ITC and risks disallowance with interest and penalty under Section 122.
- A composition supplier who charges GST on a tax invoice breaches Rule 5(g), must remit the GST, and may lose composition eligibility under Section 10 for the year.
- An unregistered supplier labelling a document "tax invoice" with GST commits a Section 32 violation; with no GSTIN, the recipient cannot match ITC in GSTR-2B.
- For the registered taxable case use the [pakka bill generator](/pakka-bill); for the broader question see [invoice vs receipt vs quotation](/answers/invoice-vs-receipt-vs-quotation).

## Which Bill of Supply errors trigger audit scrutiny?

> **Short answer:** Five recurring defects attract scrutiny disproportionate to their severity, led by the missing [Rule 49(2)(b)](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended) declaration on composition documents.

- Missing serial number: Rule 49 with Rule 46(b) requires a unique consecutive serial per financial year, maximum 16 characters; absence invalidates the document.
- Missing composition declaration on the composition variant: the most common single defect in audit data.
- Wrong-format date: DD-MM-YYYY and ISO YYYY-MM-DD are both accepted, but mixing formats is the visible flag.
- Charging tax on a BoS: the recipient gets no ITC since the BoS does not feed GSTR-2B; the supplier owes the amount under Section 76 plus a Section 31 violation.
- Missing HSN or SAC: Rule 49 with Rule 46(g) is explicit; four-digit HSN is acceptable below Rs. 5 crore turnover, else the supply cannot be reconciled against the tariff.

## How do I generate a compliant Bill of Supply?

> **Short answer:** Use the [Bill of Supply generator](/bill-of-supply): a four-step form keeps the [Rule 49](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended) layout intact, the PDF is built in-browser, and a clean copy is Rs. 4.

- A pre-form GST-status router asks two yes/no questions, then selects pakka-bill, composition, or unregistered, with manual override.
- The four steps are Bill details, Parties, Items, and Preview, where the Preview renders the PDF with all eight Rule 49(2) fields populated.
- On the composition variant the Rule 49(2)(b) declaration loads by default, editable with a reset-to-statutory-default control; overrides are logged in metadata.
- Payment is Rs. 4 via Razorpay or 1 credit per BoS under the [corporate plan](/corporate); the PDF is built in-browser via pdf-lib, so no row data leaves the browser and the free preview is watermarked.
- For batches, the [bulk-Excel mode](/corporate-bulk) accepts up to 500 BoS per upload, the variant column gating which fields validate per row.

**[Generate a Bill of Supply: free watermarked preview, Rs. 4 for the clean PDF](https://hrareceipt.in/bill-of-supply)**

## Primary sources

- [Section 31, CGST Act 2017 — CBIC](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) — Tax invoice + Bill of Supply statutory basis
- [Rule 49, CGST Rules 2017 — CBIC](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-rules-as-amended) — Bill of Supply format + mandatory fields
- [Section 10, CGST Act 2017 — Composition scheme](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) — Composition-scheme statutory basis
- [Section 23, CGST Act 2017 — Registration threshold](https://www.cbic.gov.in/htdocs-cbec/gst/cgst-act) — Who is not liable for GST registration

## Related

- [The composition scheme itself: eligibility, rate, and document (Section 10)](https://hrareceipt.in/answers/gst-composition-scheme-section-10)
- [No GSTIN but client wants an invoice? Issue a bill of supply](https://hrareceipt.in/answers/non-gst-invoice-format-bill-of-supply)
- [GST Invoice (Pakka Bill) Generator](https://hrareceipt.in/pakka-bill)

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*Source: [Bill of Supply: Composition or Unregistered, Which Variant Do You Issue?](https://hrareceipt.in/answers/composition-vs-unregistered-bill-of-supply-when) — HRAReceipt.in*
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