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What a purchase order is, how the PO process works, what to include, a worked example with GST, and how a PO differs from a quotation, an invoice and a proforma invoice.
Checked against current rules for Purchase order as a buyer-side commercial document with no prescribed GST format; tax invoice for a taxable supply under Section 31 of the CGST Act and Rule 46 of the CGST Rules; input tax credit conditioned on a tax invoice or debit note under Section 16 of the CGST Act on 29 September 2026. Source: CBIC — Sections 16 and 31, CGST Act, 2017; Rule 46, CGST Rules, 2017 (as amended).
A purchase order, often shortened to PO, is a document a buyer sends to a supplier to order specific goods or services. It states what the buyer wants, in what quantity, at what price and on what delivery and payment terms. It is created by the buyer and addressed to the seller, so it is a buyer-side document, not a bill.
Nothing in GST law makes a purchase order compulsory for a business transaction, and no statutory format is prescribed for one. Many businesses use POs for control and record keeping, or because a customer's or supplier's process requires them. This article is general information, not legal or tax advice for your specific deal.
The exact flow differs from business to business, and a small purchase may skip several steps. A common sequence looks like this:
Buyers with several approvers often use the PO number as the reference that ties the order, the delivery and the invoice together. Sellers use it to confirm that an order is real and to match it to the customer's payment. When the goods travel, the difference between a delivery challan and an invoice is worth knowing before you reconcile the two.
No law prescribes the contents of a purchase order, so the fields below are practical guidance rather than a statutory checklist. The last column shows how essential each one usually is.
| Field | What it covers | How essential |
|---|---|---|
| PO number | A unique reference, ideally in a running series | Commonly useful in nearly every case |
| PO date | The date the order is issued | Commonly useful in nearly every case |
| Buyer details | Name, address, contact and GSTIN if registered | Commonly useful; GSTIN only if registered |
| Supplier details | Name, address, contact and GSTIN if known | Commonly useful; GSTIN depends on the supplier |
| Billing and shipping details | Where the invoice goes and where goods are delivered | Depends on the transaction; needed if the two differ |
| Item or service description | Clear description, and specifications if they matter | Commonly useful in nearly every case |
| Quantity and unit | How many, in what unit | Commonly useful in nearly every case |
| Unit price | Agreed or expected rate per unit | Commonly useful in nearly every case |
| Taxes | Expected GST and how it is split | Depends on registration and the type of supply |
| Delivery information | Expected date, place and any conditions | Commonly useful; depends on goods or services |
| Payment terms | Advance, credit days, milestones | Commonly useful, and often set by the buyer's process |
| Notes and terms | Special conditions, warranty, inspection, packing | Depends on the deal or the buyer's policy |
| Authorised person or signature | Who approved and issued the order | Where the buyer's internal process uses one |
Your own process, your customer's or supplier's requirements and the type of goods or services may add fields, such as an approval reference, a project code or a required delivery window. Put in what a reasonable supplier needs to fulfil the order correctly, and no more.
A small analytics company in Pune is furnishing a new office and orders from a local furniture supplier. This is an illustration with made-up names and an assumed 18% GST rate; check the correct rate for the actual goods before using any figure like this.
| Detail | Value |
|---|---|
| Buyer | Sunrise Analytics Pvt Ltd, Baner, Pune, Maharashtra |
| Supplier | Kavya Office Interiors, Pimpri, Pune, Maharashtra |
| PO number | PO-2026-014 |
| PO date | 29 September 2026 |
| Expected delivery | Within 10 working days, to the Baner office |
| Payment terms | Payable within 15 days of receiving the tax invoice |
| Item | Quantity | Unit price | Amount |
|---|---|---|---|
| Ergonomic office chair | 10 | ₹6,500 | ₹65,000 |
| Workstation desk, 1200 mm | 8 | ₹9,000 | ₹72,000 |
| Storage cabinet | 2 | ₹12,500 | ₹25,000 |
| Subtotal | ₹1,62,000 | ||
| CGST at 9% | ₹14,580 | ||
| SGST at 9% | ₹14,580 | ||
| Total | ₹1,91,160 |
Both parties are in Maharashtra, so the expected GST splits into CGST and SGST; for a supply between different states it would appear as IGST instead. The tax on the PO is only an estimate. The supplier's tax invoice, issued when the furniture is supplied, is the document that carries the actual tax and that the buyer uses for any input tax credit it is entitled to.
The two documents travel in opposite directions. A quotation goes from seller to buyer and says what the seller will charge; a purchase order goes from buyer to seller and says what the buyer wants to order. The usual sequence is quotation first, then purchase order. The quotation format and sample shows the seller's side, and the estimate vs quotation guide covers the earlier price-discussion stage.
| Aspect | Quotation | Purchase order |
|---|---|---|
| Issued by | Seller | Buyer |
| Sent to | Buyer | Seller |
| Purpose | Offer goods or services at stated prices | Order specific goods or services |
| Typical timing | Before the buyer decides | After the buyer has chosen a supplier |
| Usually refers to | The seller's own price and terms | The accepted quotation or agreed terms |
A seller can prepare a quotation with the free quotation generator, while a buyer who wants an early ballpark can ask for an estimate from the free estimate generator.
A purchase order is the buyer's request to buy. An invoice is the supplier's document for a supply that has taken place. The PO comes first and the invoice comes after delivery, so they play different roles and one cannot stand in for the other.
In particular, a purchase order is not a GST tax invoice and does not create input tax credit. For a taxable supply the supplier issues a tax invoice with the particulars that Rule 46 of the CGST Rules requires, as covered in what a GST invoice must contain. The supplier can build one with the free GST invoice generator.
A proforma invoice is issued by the seller, before supply, as a preliminary invoice-style document; a purchase order is issued by the buyer to place the order. A seller may send a proforma invoice after receiving a PO, for instance so the buyer can release an advance. Neither is a tax invoice. The differences between the sales documents are set out in quotation vs proforma invoice vs tax invoice, and sellers can prepare a proforma with the free proforma invoice generator.
To skip the layout work, you can create a free purchase order online, preview it and download it as a PDF. It takes the buyer and supplier details, line items and delivery and payment terms, and totals the amounts for you.
A purchase order helps most when more than one person is involved, when a purchase needs approval, or when you want a clear written record of what was ordered. A small cash purchase may not need one. Whether to use POs is a business decision, and you can start with a simple process and add controls as your volume grows.
Keep the documents apart
A purchase order, a delivery challan, a proforma invoice and a GST tax invoice each do a different job in the same transaction. Keeping the numbers and details consistent from one to the next makes reconciliation far easier.
Free Purchase Order Generator
Create a professional purchase order online for free — a buyer's order to a vendor/supplier with optional GST estimate, then preview, print or download it as a PDF.
What is a purchase order?
A purchase order (PO) is a document a buyer sends to a supplier to formally order specific goods or services, usually listing the items, quantities, agreed prices and delivery and payment terms. It is issued by the buyer and is not a bill.
Is a purchase order an invoice?
No. A purchase order is the buyer's request to buy; an invoice is the supplier's document for a supply that has been made. A purchase order does not replace a GST tax invoice, and it is not proof that goods or services were supplied or paid for.
Who creates a purchase order?
The buyer. The supplier may send a quotation first, and the buyer then issues a purchase order to place the order. The supplier normally accepts it, fulfils it and later issues the invoice.
Is a purchase order legally required?
GST law does not require a purchase order for a sale or purchase. Many businesses use one as an internal control or because a customer's or supplier's process asks for it. Whether a particular PO binds either party depends on its terms, its acceptance and the circumstances, so take legal advice for high-value or unusual deals.
Can a purchase order include GST?
It can show the expected GST so both sides see the likely total, and many buyers prefer that. GST itself is charged on the tax invoice for the supply, so treat the tax on a purchase order as an estimate. If you show it, state whether prices include or exclude GST.
What is the difference between a PO and a quotation?
A quotation goes from seller to buyer and offers goods or services at stated prices. A purchase order goes from buyer to seller and places an order, often based on an accepted quotation.
Can I create a purchase order online?
Yes. A free online purchase order generator lets you enter the buyer, supplier, items and terms and download a PDF. Check the details against your quotation or agreement before you send it, because the supplier will rely on them.
Free Quotation Generator
Create a professional quotation online for free — propose a price for goods or services, with or without GST, then preview, print or download it as a PDF.
Free Estimate Generator
Create a professional estimate online for free — communicate expected pricing to a customer before work begins, with optional discount and GST or custom tax, then preview, print or download it as a PDF.
Free Proforma Invoice Generator
Create a professional proforma invoice online for free — a preliminary commercial document with optional GST estimate, then preview, print or download it as a PDF.
Free GST Invoice Generator
Create a professional GST invoice online for free, with automatic CGST, SGST and IGST calculations.
Free Delivery Challan Generator
Create a professional delivery challan online for free — document the movement of goods from sender to receiver, with optional transport details, then preview, print or download it as a PDF.
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