Which document should a regular registered seller issue?
For a wholly exempt supply to a registered buyer, issue a bill of supply under section 31(3)(c) of the CGST Act and Rule 49. The buyer's GSTIN belongs on the document; it does not make the supply taxable. This guide covers regular registered suppliers with wholly exempt domestic B2B transactions. Review composition supplies, sector-specific documents and other exceptions separately.
Read the applicable text: CBIC: CGST Act, sections 2 and 31 CBIC: CGST Rules 46A and 49.
Establish the exemption before selecting the document
Section 2(47) includes nil-rated supplies, supplies wholly exempt under the relevant exemption provision and non-taxable supplies. Keep the legal category and effective date in the product master. Match the goods or services and any conditions to the operative entry before issuing the document. Do not use a zero rate as a default for an unclassified item. Zero-rated exports or qualifying SEZ supplies require their own analysis under the IGST Act.
Populate the Rule 49 fields
Use supplier name, address and GSTIN; consecutive serial number and issue date; the registered recipient's name, address and GSTIN or UIN as applicable; classification code and a meaningful description; value reflecting qualifying discount or abatement; and signature or digital signature where required. Rule 49 has a specific signature exception for electronic bills issued in accordance with the Information Technology Act, 2000. Rule 49 applies the provisos to Rule 46 with the necessary changes. Check the applicable notified HSN requirements using the preceding financial year’s aggregate turnover and recipient status; the notification’s relaxation for unregistered recipients does not apply to the B2B cases here.
Design numbering for a financial year
The number can be drawn from one or more consecutive series and must be unique for a financial year, up to sixteen characters, with letters, digits, hyphen or slash as permitted. Allocate non-overlapping series across issuing units under the same registration. Preserve voided numbers with a reason and sequence evidence as a practical control; do not silently recycle them.
Connect the document to dispatch and reporting
Record the discount or abatement reflected in the Rule 49 value and tie the net amount to the sales ledger. These examples use a discount agreed and recorded when billing; do not deduct the same discount again when a unit price is already net. Keep the exemption basis, dispatch references and buyer identity linked to the final bill. A bill of supply does not charge GST on the exempt sale or convey ITC on that sale. Review any separate transport-document and e-way bill requirements and reconcile outward reporting by the correct classification.
Keep mixed baskets out of the exempt template
Rule 46A permits an invoice-cum-bill of supply for taxable and exempt supplies to an unregistered person. Do not extend that permission to a registered customer merely because there is one purchase order. Review whether the items are truly separate supplies or a composite or mixed supply before choosing the documents. Rule 49 also deems a qualifying document under another Act for a non-taxable supply to be a bill of supply.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Bill value after a recorded discount
An exempt B2B order has 150 units at ₹80 and an agreed 5% discount recorded on the bill. Gross is ₹12,000, discount ₹600 and bill value ₹11,400 with no GST charged.
Illustrative example 2: Two exempt lines
A wholesaler bills 40 units at ₹140 and 15 units at ₹220. With an eligible ₹350 order discount recorded on the document, value is ₹5,600 plus ₹3,300 less ₹350, or ₹8,550.
Illustrative example 3: Serial length at the boundary
BOS/26-27/000001 uses sixteen characters. Adding a seventh running digit makes seventeen; shorten the prefix or plan a compliant new series before exhaustion.
Illustrative example 4: One repeated serial in two channels
Two warehouses under one GSTIN both issue EX/000041 in the same year. There are two bills but one distinct number. Trace the affected documents and lock future numbering to separate prefixes.
Illustrative example 5: Registered customer with two independent supplies
A ₹42,000 exempt line and a separate ₹18,000 taxable line produce ₹60,000 before tax. Put ₹42,000 on the bill of supply and invoice the taxable ₹18,000 separately at its applicable rate.
Illustrative example 6: Three-day ledger reconciliation
Exempt bills are ₹22,500, ₹19,200 and ₹8,300. The expected total is ₹50,000. A ledger total of ₹41,700 leaves ₹8,300 to trace to the missing or misclassified posting.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm that the supplier registration matches the issuing unit | GST registration and location master |
| 2 | Validate the recipient's GSTIN and legal identity | Current buyer master and transaction support |
| 3 | Approve the exemption for the exact product or service | Operative notification and classification note |
| 4 | Check any packaging, use or recipient conditions | Product evidence and contract |
| 5 | Separate wholly exempt supplies from taxable baskets | Reviewed order and supply classification |
| 6 | Validate serial syntax, length and financial-year uniqueness | Numbering configuration and exception report |
| 7 | Check identity, issue date, description and classification code | Sample generated bill |
| 8 | Recompute the eligible discount and net value | Purchase order and bill calculation |
| 9 | Check authentication and any separate dispatch requirements | Final bill and transport file |
| 10 | Reconcile the bill series and exempt ledger totals | Monthly ledger and outward-report working |
Sixteen practitioner FAQs
1. Does every sale to a GST-registered buyer require a tax invoice?
A wholly exempt supply by a registered seller calls for a bill of supply under section 31(3)(c).
2. Can the buyer's GSTIN be omitted because GST is nil?
Rule 49 requires the registered recipient's particulars, including the applicable GSTIN or UIN.
3. Can the system label an unclassified item exempt?
No. Establish the legal basis and check conditions before approval.
4. Is zero-rated the same as exempt?
Do not use the labels interchangeably. Zero rating under the IGST Act has its own rules.
5. Is an underscore allowed in the bill number?
No. Rule 49 permits a hyphen and a slash as special characters; it does not list an underscore.
6. Can two branches share a number generator?
Yes, if it preserves the prescribed sequence and prevents duplicate numbers within the financial year.
7. Can a later year reuse the same numerical counter?
The uniqueness test is financial-year based. Use year-aware controls and preserve old records.
8. Do optional fields such as purchase-order number replace required fields?
No. They can be added for reconciliation.
9. Does a PDF always meet the electronic signature exception?
No. Test whether the bill is issued electronically in accordance with the stated law.
10. Can the buyer take ITC on the exempt sale from this document?
There is no GST charged on that sale to credit.
11. Should a discount be deducted twice if ERP shows a net unit rate?
No. Recompute from the agreed price structure and use a single adjustment.
12. May one wholly exempt bill show several goods?
Rule 49 contemplates description and value for goods or services or both. Record accurate item-level support.
13. Can Rule 46A cover a taxable-and-exempt basket sold to a registered buyer?
That rule is limited to supplies to an unregistered person. First classify the underlying supplies.
14. Is a delivery reference the same as the bill number?
No. Link them so dispatch and revenue can be traced separately.
15. Is the bill itself proof that every exemption condition was met?
No. Keep the notification and evidence of the facts that satisfy it.
16. How should the business handle a numbering error found after issue?
Keep both the original audit trail and evidence of any correction. Review its reporting consequences before changing the customer record.
Official sources
CBIC: CGST Act, sections 2 and 31 CBIC: CGST Rules 46A and 49
Notification 78/2020–Central Tax: HSN requirements effective 1 April 2021