Inward and Outward Supply under GST (2026): Meaning, Reporting and Differences
CA Meet Dhrangadhariya 
May 18, 2026
CA Meet Dhrangadhariya May 18, 2026
Table of Contents
7 min readTable of Contents
Last updated: 15 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
Correctly telling an inward supply from an outward supply decides which GST return table a transaction belongs in, and whether it feeds an input tax credit claim or an output tax liability. Getting this wrong is one of the more common sources of mismatches between a business’s books and its GST returns.
Under section 2(67) of the CGST Act, inward supply is the receipt of goods or services, by purchase, acquisition or any other means, with or without consideration.
Examples:
Inward supplies are generally eligible for input tax credit, subject to the restrictions in section 17(5) (blocked credits).
A recipient does not directly report inward supplies; they are reported through the supplier’s filings and then flow to the recipient:
The flow in practice: the supplier uploads the invoice in GSTR-1, it appears in the recipient’s GSTR-2A and the Invoice Management System (IMS), the recipient reconciles it against their purchase register and takes action in IMS, it then flows into GSTR-2B, and the recipient reports the resulting eligible ITC in GSTR-3B. Reconciling the purchase register with GSTR-2B before claiming ITC in GSTR-3B is the standard safeguard against mismatches and ineligible claims.
| Field | Source |
|---|---|
| HSN code (6 or 8 digit) | Purchase register / GSTR-2A |
| Description | Auto or manual |
| UQC (unit, e.g. NOS, KGS, LTR) | Purchase data |
| Total quantity | Purchase data |
| Total value | Books |
| Taxable value | Books |
| Rate of tax | Books / GSTR-2A |
| IGST / CGST / SGST | Based on place of supply (inter-State or intra-State) |
This detail is reported in Table 18 of GSTR-9; verify it against the purchase register and GSTR-2B before filing.
Under section 2(83), “outward supply,” in relation to a taxable person, means a supply of goods or services by sale, transfer, barter, exchange, licence, rental, lease or disposal, or any other mode, made or agreed to be made in the course or furtherance of business.
An outward supply is therefore made by a taxable person, can take several forms (sale, barter, lease, licence and more), must be in the course or furtherance of business, and covers both goods and services. This definition is the basis for determining GST liability, since outward supplies are generally taxable unless specifically exempted.
Examples: sale of goods to a customer, leasing machinery to another business, providing consulting services, bartering office equipment, and an advance received for a future supply.
| Supply type | Description | GSTR-1 table |
|---|---|---|
| B2B supplies | Invoice-wise details of taxable supplies to registered persons | Table 4A |
| B2B supplies under reverse charge | Supplies to registered persons liable to RCM (e.g. GTA, legal services) | Table 4B |
| Supplies via e-commerce operators | Supplies attracting TCS provisions | Table 4C |
| B2C Large supplies | Invoice-wise details of inter-State supplies above Rs 1 lakh | Table 5A |
| B2C Small supplies | Consolidated details of supplies at or below Rs 1 lakh | Table 7 |
| Exports | Invoice-wise details, with or without payment of tax | Tables 6A, 6B |
| Nil-rated / exempt / non-GST supplies | Summary figures | Table 8 |
| Credit / debit notes | Amendments to earlier invoices | Tables 9B, 9C |
The B2C Large threshold is Rs 1 lakh, not Rs 2.5 lakh. GSTN reduced the invoice-value threshold for reporting an inter-State B2C supply individually (rather than in the consolidated B2C Small figure) from Rs 2.5 lakh to Rs 1 lakh, effective for the GSTR-1 of the August 2024 tax period onward. Several older guides still quote the earlier Rs 2.5 lakh figure; check this before relying on any pre-2024 reference.
| Form | Category | Table reference |
|---|---|---|
| GSTR-3B | B2B, B2C Large, B2C Small supplies | Table 3.1(a) |
| GSTR-3B | Exports and SEZ supplies (zero-rated) | Table 3.1(b) |
| GSTR-3B | Nil-rated / exempt / non-GST supplies | Table 3.1(c) |
| GSTR-3B | Supplies attracting reverse charge | Reported by the recipient, Table 3.1(d) |
| GSTR-3B | Credit / debit notes | Adjusted within 3.1(a)/(b)/(c) as applicable |
| GSTR-9 | B2B supplies (taxable, RCM, e-commerce) | Tables 4A, 4B, 4C |
| GSTR-9 | B2C Large supplies | Table 5A |
| GSTR-9 | B2C Small supplies | Table 5B |
| GSTR-9 | Exports / SEZ supplies | Tables 6A, 6B |
| GSTR-9 | Nil-rated / exempt / non-GST supplies | Tables 5D, 5E, 5F |
| GSTR-9 | Credit / debit notes | Table 9B |
| Field | Source table | Notes |
|---|---|---|
| HSN code | Table 12 of GSTR-1 | Mandatory above the prescribed turnover limit |
| UQC (unit) | Table 12 | e.g. kg, pcs |
| Total quantity | Table 12 | Reported with HSN and UQC |
| Taxable value | Tables 4, 5, 6, 7, 9, 12 | Value after discount/exemption |
| Rate of tax | Tables 4, 5, 6, 7, 9 | As applicable to the item/invoice |
| IGST / CGST / SGST | Same tables | Based on place of supply |
Cross-check this summary against the sales register or ERP before filing.
| Basis | Inward supply | Outward supply |
|---|---|---|
| Who initiates it | Recipient | Supplier |
| Effect on GST return | ITC claim in GSTR-3B | Tax liability in GSTR-1 and GSTR-3B |
| Document involved | Purchase invoice | Sales invoice |
| Purpose | Consumption / utilisation | Sale / distribution |
Correctly telling inward and outward supplies apart affects the calculation of tax liability, ITC eligibility, the accuracy of the annual return, and exposure in a GST audit. Regular reconciliation between the GST portal’s statements (GSTR-2A/2B for inward, GSTR-1 for outward) and the books remains the most effective way to avoid both an understated liability and an overstated or ineligible ITC claim.
Reconciling inward and outward supplies across GSTR-1, GSTR-2B, GSTR-3B and the annual return is a routine but error-prone exercise - please reach out to our team and we will be happy to assist with monthly reconciliation and return filing.
| Term | What it means |
|---|---|
| Inward supply | What a business receives - goods or services bought, acquired or imported. |
| Outward supply | What a business supplies to others in the course of its business. |
| GSTR-2A | A dynamic statement showing what suppliers have uploaded against a recipient’s GSTIN, updated continuously. |
| GSTR-2B | A static, once-a-month statement used as the basis for claiming input tax credit. |
| Invoice Management System (IMS) | The GST portal facility where a recipient accepts, rejects or keeps pending each supplier invoice before it is treated as eligible for credit. |
| B2C Large supply | A business-to-consumer, inter-State supply above the prescribed invoice-value threshold (currently Rs 1 lakh), reported invoice-wise rather than as a consolidated figure. |
Under section 2(67) of the CGST Act, an inward supply is the receipt of goods or services, by purchase, acquisition or any other means, with or without consideration. Raw material purchases, services availed, imports and credit purchases are all inward supplies.
Under section 2(83), an outward supply is a supply of goods or services by a taxable person, by sale, transfer, barter, exchange, licence, rental, lease, disposal or any other mode, made or agreed to be made in the course or furtherance of business.
They are not reported directly by the recipient. The supplier’s invoice, uploaded in their GSTR-1, flows into the recipient’s GSTR-2A (dynamic) and the Invoice Management System, then into GSTR-2B (static, monthly). Only the total eligible input tax credit is declared in Table 4 of GSTR-3B.
Directly by the supplier - invoice-wise for B2B and B2C Large supplies, and as a consolidated figure for B2C Small supplies - across the relevant tables of GSTR-1, then summarised in GSTR-3B and reconciled annually in GSTR-9.
Rs 1 lakh for an inter-State supply to an unregistered person, reduced from the earlier Rs 2.5 lakh threshold with effect from the August 2024 tax period.
An inward supply is initiated by the recipient (what the business receives, supported by a purchase invoice, feeding an ITC claim), while an outward supply is initiated by the supplier (what the business supplies, supported by a sales invoice, creating an output tax liability).
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.
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