Create professional, GST-compliant purchase orders for your business in seconds
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A Purchase Order (PO) is a legally binding commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It serves as an official offer to purchase and becomes a contract once accepted by the seller. In India, GST-compliant purchase orders are essential for B2B transactions to ensure proper input tax credit (ITC) claims.
PO Number & Date
Every purchase order must have a unique PO number for tracking and accounting purposes. The date indicates when the order was issued and helps determine payment due dates and delivery timelines.
Buyer & Seller Details
Complete legal names, registered addresses, GSTIN, and PAN of both parties. GSTIN is mandatory for claiming input tax credit under GST law in India.
Line Items with HSN Codes
Each item should have a description, quantity, unit rate, applicable discount, GST rate, and HSN/SAC code. Accurate HSN codes ensure correct GST classification and compliance.
Terms & Conditions
Payment terms (Net 30, Net 60), delivery terms, inspection clauses, penalty for delay, and return policy. These protect both buyer and seller in case of disputes.
For B2B transactions in India, GST is charged on the purchase order and the buyer can claim Input Tax Credit (ITC):
Intra-State (Within Same State)
CGST + SGST/UTGST is applied. For example, if both buyer and seller are in Maharashtra, 9% CGST + 9% SGST = 18% total GST.
Inter-State (Different States)
IGST is applied at the full rate. For example, if buyer is in Maharashtra and seller is in Delhi, 18% IGST applies.
Input Tax Credit (ITC)
The buyer can claim ITC on the GST paid, provided the seller has filed their GSTR-1 and the transaction reflects in the buyer's GSTR-2B. Always verify the seller's GSTIN before placing orders.
Is a purchase order legally binding in India?
Yes, a purchase order is a legally binding contract once the seller accepts it. It serves as evidence of the agreed terms, quantities, and prices. In case of disputes, the PO is admissible in court along with other correspondence.
What is the difference between a PO and an invoice?
A Purchase Order is issued by the buyer to request goods/services. An Invoice is issued by the seller to demand payment after delivery. The PO comes first; the invoice comes after the transaction is executed.
Do I need GST on a purchase order?
Yes, for B2B transactions, GST must be shown on the purchase order to ensure the buyer can claim input tax credit. The PO should clearly mention the GST rate (CGST/SGST or IGST) and the seller's GSTIN.
Can I modify a purchase order after sending it?
Yes, but it requires a formal amendment or a new PO. The seller must accept the amended terms. It is best practice to issue a "PO Amendment" document referencing the original PO number to maintain a clear audit trail.
What happens if the seller does not accept the PO?
If the seller rejects the PO or proposes changes, there is no contract. The buyer may negotiate and issue a revised PO. Until acceptance, neither party is legally bound by the PO terms.
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