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Purchase Order › PO vs invoice
Purchase order vs invoice, and checking the bill
A purchase order comes from the buyer before the goods. A tax invoice comes from the supplier with the goods. Matching the two before paying is the simplest way to stop overbilling.
The difference at a glance
| Purchase order | Tax invoice | |
|---|---|---|
| Issued by | Buyer | Supplier |
| When | Before supply | At supply (for goods, on removal or delivery) |
| What it says | What you want to buy | What was supplied, and the amount due |
| GST payable because of it? | No | Yes, by the supplier |
| Input tax credit on it? | No | Yes, for the buyer, if the other conditions are met |
| Numbering | Buyer's series (PO/…) | Supplier's series |
A purchase order is not a GST document. It is not shown in any GST return, and you cannot claim input tax credit on it. Credit comes from the supplier's tax invoice, once it shows in your GSTR-2B and the goods are received.
The usual paper trail
- Quotation from the supplier (they may use the quotation maker).
- Purchase order from you, quoting their quotation number.
- Delivery challan or tax invoice with the goods (see the challan maker).
- Goods received: you count and check, and note what is short or damaged.
- Tax invoice checked against the PO and what you received, then paid.
- Credit note from the supplier for anything returned or overcharged (see the credit note maker).
Matching before you pay: a worked example
PO/26-27/014 ordered 1,000 courier bags at ₹18 and 50 rolls of tape at ₹65: ₹21,250 + IGST ₹3,825 = ₹25,075.
| Check | PO | Received | Invoice |
|---|---|---|---|
| Bags | 1,000 at ₹18 | 960 good, 40 torn | 1,000 at ₹19 |
| Tape | 50 at ₹65 | 50 | 50 at ₹65 |
Two problems: 40 bags are damaged, and the rate went up by ₹1. You should pay only for 960 bags at ₹18 = ₹17,280, plus tape ₹3,250 = ₹20,530, plus IGST 18% ₹3,695.40 = ₹24,225.40. Ask the supplier for a credit note for the difference instead of simply paying less, so both books and both GST returns agree.
In the maker
- When the goods arrive, open Saved purchase orders and set the status to Goods received. If an order will not be supplied, set it to Cancelled.
- Open the saved PO on your phone at the gate to count against it.
- Write any shortage in Notes and save, so the record is in one place.
Before you claim input tax credit
Input tax credit on the supplier's invoice needs, among other conditions, that you have the tax invoice, the goods have reached you, and the invoice shows in your GSTR-2B because the supplier filed it. Your PO helps you spot a wrong GSTIN, a wrong state or a wrong rate early: if the invoice says IGST but the supplier is in your own state, ask for it to be corrected before you pay.