The whole family at a glance
Billing documents make sense the moment you sort them by what they do rather than what they look like. Four things can happen in a sale: goods move, money becomes owed, the owed amount changes, and money arrives. Each event has exactly one document — and mixing them up is where billing goes wrong.
| Document | Job | Moves stock? | Charges GST? | Creates / changes receivable? |
|---|---|---|---|---|
| Delivery challan / packing slip | Accompanies goods in transit | Yes — at dispatch | No | No |
| Tax invoice (domestic) | Bills dispatched or ordered goods | No | Yes — CGST/SGST or IGST | Creates it |
| Export invoice | Bills an export sale | No | Zero-rated / LUT as configured | Creates it |
| Credit note | Reduces what the customer owes | No | Reverses GST | Reduces it |
| Debit note | Increases what the customer owes | No | Adds GST | Increases it |
| Cancelled invoice | Voids an invoice, frees its quantity | No | Reversed | Removes it |
| Payment receipt | Records money received | No | No | Settles it |
| Supplier bill | Vendor's invoice to you, approved | No | Input side | Creates a payable |
| Project bill | Bills project work / resources | No | Yes | Creates it |
The sections below take each in turn. For where these sit in the end-to-end flow, keep the billing process guide beside this one; for the concepts underneath, the pillar: what is GST billing software?
Tax invoice — and its export variants
The tax invoice is the centre of the family: the GST-compliant commercial document that turns a dispatch or order into money owed. It carries the parties (bill-to and ship-to), item lines with HSN codes, quantities and rates, taxable value, the CGST/SGST or IGST computed from your tax configuration, other charges such as freight and packing, rounding, and the total spelled out as amount in words in Indian numbering. It is a financial document — raising it moves no stock, because the goods already left on the challan.
Export invoices are variants of the same document for export sales, where GST is suppressed or zero-rated treatment applies — under LUT or with the refund route — as configured for your business. Same engine, same discipline, different tax treatment; confirm the specifics of your export documentation with your CA. The product implementation of both is the GST Tax Invoicing feature.
Delivery challan / packing slip
The delivery challan (with its packing-slip sibling) is the document that travels with goods. It lists what is moving, in what quantity, with the transport details an e-way bill needs — and that is all it does. It charges no tax and creates no receivable. In a dispatch-linked system the challan is the dispatch document the invoice is later raised against; in billing-only mode it is a standalone accompaniment to goods. The challan-versus-invoice distinction matters enough to have its own guide — delivery challan vs tax invoice — and its own feature page: Delivery Challan & Packing Slip.
Credit note
The credit note formally reduces what a customer owes, and reverses the matching GST. The everyday trigger is a sales return: goods come back, and well-built software raises the credit note automatically against the original dispatch, so the customer ledger corrects itself without anyone editing an invoice. Other triggers: a short supply you are crediting, an agreed rate reduction, or reversing an invoice's value. The non-negotiable rule — in GST and in audit — is that every credit note references the invoice it adjusts; a note floating free of its invoice is precisely what causes return mismatches.
Debit note
The debit note is the mirror: it increases what a party owes after the original invoice. Typical causes are an under-charge discovered later, a rate difference in your favour, or an additional charge — freight, testing, tooling — recovered after billing. Like the credit note it is a formal GST document tied to its invoice and flowing into returns. Both notes are implemented together in Credit & Debit Notes.
Cancelled invoice
Sometimes the correction is not an adjustment — the invoice itself was wrong. Wrong party, wrong dispatch, wrong fundamentals. A proper cancellation voids the document into a cancelled state and — the detail that separates real billing systems from templates — releases the dispatched quantity the invoice had consumed, so the dispatch can be re-billed correctly. Without that release, a cancelled invoice leaves its dispatch stranded: the quantity looks billed, no valid invoice exists, and the books drift from reality. This mechanism is one half of the double-billing guard explained in how billing software prevents double billing.
Want to see every one of these documents raised live?
Challan, invoice, credit note, receipt, supplier bill — a 30-minute demo of Fast Billing Software raises each one on your own items and shows the links between them.
Payment receipt
The receipt records money arriving — and its precision is what makes receivables manageable. A good receipt entry books the payment against one or more specific invoices, handles part payments, and adjusts advances: money received on account before billing is applied to invoices as they arise, so only the true balance stays outstanding. From receipts flow the ageing report, the party-wise outstanding position, and the follow-up discipline described in Payments, Receipts & Follow-up. In the books, each receipt becomes a receipt voucher.
Supplier bill — the buy side
Everything above looks at sales; the supplier bill is the same story from the other chair. Your vendor's invoice to you is captured, checked against its purchase order and goods receipt, and passes through an approval gate before it can post to the accounts as a purchase voucher. That gate is the accounts-payable control: it is what stops payment for goods never received, duplicate payment of the same bill, and rates that were never agreed. Approval workflows and reporting live under Accounts, Vouchers & Expenses.
Vouchers, expenses and the odd cases
Not every entry is driven by an invoice. Manual vouchers — journal, payment, receipt — cover the entries that arise outside the billing chain; expense entries are captured against defined expense types, each mapped to an account head, with their own approval step before they hit the accounts. Legacy statutory documents also live here: C-Forms, the inter-state CST declaration forms, are still tracked against old invoices for businesses with pending assessments from the pre-GST era. These keep the light-accounting layer complete without pretending to replace the book of record — the division of labour explained in billing software vs accounting software.
Project bill
The project bill serves firms that sell work rather than SKUs — construction, EPC, fabrication, job-work, services. It is raised against a project and its bill-of-resources: labour hours, machine time, materials consumed, progress milestones. Tax treatment, totalling and amount-in-words behave exactly as on a product invoice; only the source differs. See Project & Resource Billing and the construction & project billing industry page.
How the documents link — the chain that reconciles
The family only works because the documents reference each other. The invoice is raised against the dispatch or order; the credit note points to the invoice (and through it, the dispatch) it reverses; the receipt settles named invoices; the cancellation releases the exact quantities its invoice had consumed. Follow any thread — a returned lot, a disputed payment, a GST query — and the chain answers it: this challan, this invoice, this note, this receipt, in order, with amounts that reconcile.
That linkage is also what your reports are made of: the invoice register, the order-vs-billed pending report, party-wise GST for return preparation, and outstanding by party all fall out of the references automatically. Documents that do not link — the Word-template invoice, the diary payment, the verbal adjustment — are why manual billing cannot produce those answers. Every document above, once confirmed, posts to Tally as its matching voucher, keeping the books in step without re-keying.
The full set in Fast Billing Software
Fast Billing Software implements this entire family on one document engine — the same masters, the same reference chain, every document aware of the ones it belongs to:
Frequently asked questions
What are the main types of billing documents?
They group by job. Documents that bill: the tax invoice (domestic) and export invoice variants. Documents that move goods: the delivery challan or packing slip. Documents that correct: the credit note (reduces what a customer owes, typically on a sales return), the debit note (increases it), and the cancelled invoice. Documents that record money: the payment receipt with advance adjustment. On the buy side: the supplier bill with approval. Plus manual vouchers for entries no invoice drives, and project bills for firms that bill work rather than SKUs.
What is the difference between an invoice, a challan and a receipt?
The challan moves goods — it accompanies material in transit, carries e-way bill data, charges no tax and creates no receivable. The tax invoice bills goods — it attaches value and GST, and creates the amount the customer owes. The receipt records money — the payment booked against specific invoices, adjusting any advance. Movement, liability, settlement: three different events, three different documents, linked so the chain reconciles.
When is a credit note used and when is a debit note used?
A credit note reduces what the customer owes: goods returned, short supply credited back, an agreed rate reduction, or an invoice being reversed. Well-built software raises it automatically on a sales return, against the original dispatch and invoice. A debit note increases what the customer owes after the invoice: an under-charge, a rate difference in your favour, or an extra charge to recover. Both must reference the invoice they adjust and flow into your GST returns.
What is a cancelled invoice and how is it different from a credit note?
A credit note adjusts an invoice that stands — it reverses part or all of the value while the original document remains valid. A cancellation voids the invoice itself: the document moves to a cancelled state, and the dispatched quantity it had consumed is released so the dispatch can be re-billed correctly. Use a credit note for commercial corrections and returns; use cancellation when the invoice should never have been raised as it was.
What is a supplier bill and why does it need approval?
A supplier bill is the vendor's invoice to you — the purchase-side mirror of your sales invoice. Approval is the control gate: the bill is captured, checked against its purchase order and goods receipt, and only an approved bill posts to the accounts as a purchase voucher. That gate stops paying for goods never received, paying twice, or paying a rate that was never agreed.
What is a project bill?
A project bill invoices work rather than products: it is raised against a project and its bill-of-resources — labour, machines, materials, progress milestones — instead of against a dispatch of SKUs. Construction, EPC, fabrication, job-work and services firms bill this way. For GST and the books it behaves like any tax invoice; only the source it is raised against differs.