Purchase Order Format in India: What to Include and How to Send One

A purchase order (PO) is your written order to a vendor. It states what you're buying, how much, at what price, where it should be delivered, by when, and on what payment terms. Once the vendor accepts it, the PO is the agreement: when their goods arrive and their invoice follows, you check both against it.

Small businesses often skip it and order over a phone call or a WhatsApp message. That works until a delivery arrives short, a rate on the invoice doesn't match the one you were quoted, or an accountant asks why a bill was paid. A PO turns "I think we agreed ₹480 a bag" into a document with a number.

Is a purchase order a GST document?

No. A purchase order is a commercial document, not a tax document:

• It is not reported in GSTR-1 or GSTR-3B.
• You can't claim input tax credit on a PO. Credit comes from the vendor's tax invoice.
• No e-way bill is generated against a PO. The vendor generates it against their invoice or delivery challan when the goods move.

So GST on a PO is informational. It tells you what the order will really cost, but the tax is charged, reported and paid on the vendor's invoice.

What goes on a purchase order

Include	Why
PO number and date	The reference the vendor quotes back on their invoice
Your details and GSTIN	Who's buying, and the address the invoice should carry
Vendor's details and GSTIN	Who's supplying; the GSTIN also decides CGST/SGST vs IGST
Deliver-to address	Only if goods should go somewhere other than your own address, e.g. a site or godown
Expected delivery date	So a late delivery is visible, not just felt
Items with HSN, quantity, unit and rate	The basis the vendor's invoice is matched against
GST shown separately	So the total you approve is the real cost
Quotation reference	Ties the order to the vendor's own quote
Payment terms	e.g. "30 days from delivery" or "50% advance"
Delivery terms	e.g. "Door delivery, freight included"
Terms and conditions, signature	Your standard conditions and your authorised signatory

Purchase order vs quotation vs invoice

	Quotation	Purchase order	Tax invoice
Issued by	Seller	Buyer	Seller
When	Before the deal	When the buyer decides to buy	When goods or services are supplied
What it says	"This is our price"	"Supply this, on these terms"	"Pay this, including GST"
Binding?	An offer	Yes, once the vendor accepts	Yes, a demand for payment
GST effect	None	None	Tax charged, reported, credit available

The flow is usually: the vendor sends a quotation, you raise a PO quoting it, the vendor supplies with a tax invoice that quotes your PO number, and you pay against it.

How GST appears on a purchase order

GST on a PO follows the same logic as the vendor's eventual invoice:

• Vendor and buyer in the same state (the first two digits of both GSTINs match): CGST + SGST.
• Different states: IGST.
• Vendor not registered under GST: they can't charge GST at all (CGST Act, section 32), so the PO should show none. If you see GST on an unregistered vendor's bill, ask about it.

Put HSN codes on the lines. It makes matching the vendor's invoice line by line much easier, and the rate you see on the PO is the rate you should see on the bill.

Payment terms and the MSME 45-day rule

If your vendor is a micro or small enterprise (registered on Udyam), how long you take to pay is regulated:

• MSMED Act, section 15. Pay by the date agreed in writing, which can't be more than 45 days from accepting the goods. With no written agreement, the limit is 15 days.
• Late payment costs interest. Compound interest with monthly rests at three times the bank rate notified by the RBI (section 16).
• It affects your tax. Under the income-tax law (section 43B(h) of the 1961 Act, carried into the Income-tax Act, 2025), an amount owed to a micro or small enterprise and paid late is deductible only in the year you actually pay it.

A purchase order whose payment terms the vendor accepts is a simple way to get that written agreement. Write the terms clearly, and keep them within 45 days for micro and small vendors. Medium enterprises aren't covered by this rule.

When the order is done

A PO isn't finished when it's sent. Track it through to the end:

• Not sent: saved, but not yet with the vendor.
• Sent: with the vendor; you're waiting for the goods.
• Closed: goods received and checked, or the order is otherwise complete.
• Cancelled: not going ahead.

The open ones, Not sent and Sent, are what you're still waiting on. An open order past its expected delivery date is the one to chase.

On the other side: your client's PO on your invoice

When you're the seller, larger clients send you purchase orders, and their accounts teams won't process an invoice that doesn't quote the PO number. It isn't one of the details GST requires on a tax invoice, but in practice it decides whether you get paid on time. Put the client's PO (or work order) number and date on the invoice and on any proforma before it.

How to raise a purchase order in CredHill

1. Add the vendor once. Go to Vendors → Add Vendor. Enter their GSTIN and fetch their name and address from the GST registry, or type them in. Add their MSME (Udyam) type if they have one. Vendors are kept separate from your clients.
2. Create the order. Go to Purchase Orders → Create. The next number, like PO/2026-27/001, is filled in.
3. Pick the vendor. The GST split (CGST + SGST or IGST) follows from the two GSTINs. For an unregistered vendor, the order carries no GST and tells you why. For a micro or small vendor, a note reminds you of the 45-day rule.
4. Choose where goods go. "Our address" is the default. You can also enter a site, godown or branch, or reuse one from an earlier order.
5. Add the items and terms: expected delivery date, the vendor's quotation reference, payment terms and delivery terms.
6. Preview, then print or save. The PO prints with Buyer, Vendor and Deliver To blocks in your chosen template. Your bank details are never printed on a PO.
7. Track it. The Purchase Orders list shows what's open, the total value, which deliveries are overdue and what you've ordered this month. It also has search, status changes and an Excel export.

And on the selling side, any invoice or proforma has Add client's PO / WO no., which prints the client's PO number and date and carries them from a proforma into its invoice.