A purchase order (PO) is the document a buyer sends a supplier to order goods: what, how many, at what price and by when. The invoice comes later, from the supplier, and asks to be paid for what was delivered. A PO for 100 units at Rs 40 commits Rs 4,000. If 96 units arrive, the invoice should bill Rs 3,840, and the PO is how the buyer knows.
Purchase order vs invoice
| Purchase order | Invoice | |
|---|---|---|
| Who sends it | The buyer | The supplier |
| When | Before the goods are sent | With or after delivery |
| What it says | What the buyer wants and the price agreed | What the buyer owes for what was supplied |
| Its number | The buyer's PO number | The supplier's invoice number |
| What it is used for | Agreeing the order, checking the delivery | Payment, accounts and tax |
A purchase order invoice is not a separate document. People use the phrase for an invoice that quotes the buyer's PO number, so the buyer can match the two.
What goes on a purchase order
There is no single form every business must use. Most POs carry these fields:
- PO number and date. One number per order, in a series you keep.
- Buyer. Business name, address and, in India, the GSTIN if registered.
- Supplier. Name, address and GSTIN.
- Items. Description, quantity, unit (carton, kg, piece) and the agreed unit price for each line.
- Total. Each line's quantity x price, added up, with any discount.
- Delivery. Address and the date the goods are needed.
- Payment terms. For example payment on delivery, or within a set number of days.
- Tax note. Whether prices include or exclude tax, if known.
The formula
- Line total = quantity x agreed unit price
- PO total = sum of all line totals (before tax)
- Amount to bill = quantity received x agreed unit price
- Gap to query = invoice amount - amount to bill
Checking the PO, the goods received and the invoice against each other is often called a three-way match.
Worked example
The figures below are an example, not data from any business. The arithmetic is ours, and tax is left out to keep the sums clear.
Example: a shop sends a PO to a supplier for 100 units at an agreed Rs 40 a unit.
- PO total: 100 x 40 = Rs 4,000. This is what the shop has agreed to buy.
- Goods received: the delivery is counted at the door. 96 units arrive; 4 are short.
- Amount to bill: 96 x 40 = Rs 3,840.
- Invoice check: the supplier's invoice says Rs 4,000. The gap is 4,000 - 3,840 = Rs 160, which the shop raises before paying.
Without the PO, the shop has only the invoice to go by, and the 4 missing units are easy to miss in a busy week.
What goes on a GST tax invoice in India
The invoice is the supplier's document. Rule 46 of the Central Goods and Services Tax Rules, 2017 lists what a registered supplier's tax invoice must contain. In summary, it includes:
- The supplier's name, address and GSTIN.
- A serial number unique for the financial year, and the date of issue.
- The recipient's name, address and GSTIN if registered, with further address details in some cases for unregistered recipients.
- The HSN code, description, quantity and unit of the goods or services.
- The total value, the taxable value after any discount, the tax rate and the tax amount for each tax.
- The place of supply for inter-State supplies, the delivery address where different, and whether tax is payable on reverse charge.
- The supplier's signature or digital signature, and, where e-invoicing applies, a QR code with the invoice reference number.
Read the rule itself for the full wording and any later changes. A PO number is not on this list; suppliers often print it anyway so the buyer can match the bill. To make a GST invoice for your own sales, our free GST invoice generator works out CGST and SGST, or IGST, as you type.
What we do not know, and what varies by business
- Your supplier's terms. Payment days, delivery charges and what happens to short or damaged goods are agreed between you and the supplier.
- Whether you need a PO at all. A shop buying from the same distributor every week may order by phone. A PO matters most when amounts are large or deliveries are often short.
- The tax on your goods. Rates depend on the product. The example leaves tax out on purpose.
- Rules outside India. This article covers the Indian GST tax invoice only.
Where Ordrio fits
Bills & Books keeps suppliers, purchase orders and purchase records in one place. You order from suppliers, receive the goods and pay them from the same screen, with stock counts, returns to suppliers and supplier payments alongside. Stock updates in real time, with low-stock alerts, so you know when the next PO is due.
For wholesalers selling to retailers, Whola gives buyers their own ordering store and app, with prices per buyer group and volume pricing.
Related reading: what MOQ, minimum order quantity, means, what a backorder is, and our retail billing software checklist.
You start on the free plan. Any paid plan costs Rs 1 for the first 30 days.
Sources
- Central Board of Indirect Taxes and Customs (CBIC), Rule 46, Tax invoice, Central Goods and Services Tax Rules, 2017, on the CBIC tax information portal (taxinformation.cbic.gov.in), current text read on 5 November 2026. Summarised in our own words.
- All figures in the worked example are example figures. The arithmetic is ours and can be repeated with a calculator.
- Product details: ordrio.com pages for Bills & Books and Whola, read on 5 November 2026.
Ordrio: Sell. Run. Deliver. Online store, app, billing and delivery for shops and restaurants.