Invoices & documents Purchase orders

Purchase order format

A purchase order is your written instruction to a supplier: what to send, how much, at what rate, by when and on what terms. It is not a GST document, but it is the reference you check every supplier bill against.

Updated 2026-11-054 min read

Who this is for

Traders and distributors
Purchase managers
Manufacturers buying materials
Accountants booking bills
Business owners controlling spend

On this page 12

Why bother with a PO

Many small businesses order on a phone call or a WhatsApp voice note. That works until the supplier bills a different rate, sends 120 pieces instead of 100, or a salesman swears he ordered the blue variant. A purchase order fixes the agreement in one document that both sides can point to.

It also controls spending inside your business. When only the owner or a purchase manager can issue POs, nobody else commits the company's money, and the accountant can refuse to book a bill that has no PO behind it.

Fields to include

Field	Example
PO number and date	PO/25-26/0057, 03-11-2025
Your name, address, GSTIN, delivery address	Agarwal Distributors, Kanpur, 09ABCDE1234F1Z1; deliver to godown, Fazalganj
Supplier name, address, GSTIN	Shakti Plastics, Delhi, 07PQRSX5678K1Z4
Supplier's quotation reference	Their quote SP/Q/221 dated 30-10-2025
Items, HSN, quantity, unit, rate	Plastic bucket 16 L, HSN 3924, 600 NOS, ₹118
Discount and GST	2% discount; IGST as applicable
Delivery date	On or before 15-11-2025
Freight, packing, insurance	Freight paid by supplier up to our godown
Payment terms	45 days from date of receipt of goods

Sample totals

Line	Amount
600 buckets × ₹118	₹70,800
Less 2% discount	₹1,416
Taxable value	₹69,384
IGST at 18% (illustrative)	₹12,489
PO value	₹81,873

Delhi to Uttar Pradesh is inter-state, so the supplier's invoice will carry IGST. Your input tax credit depends on the supplier's tax invoice, not the PO, and on the other conditions in input tax credit conditions. Rates shown are only illustrations.

This is general information, not tax advice.

Terms worth printing on every PO

Please quote our PO number on your invoice, challan and e-way bill.
Goods not matching the specification or sample will be returned at your cost.
Quantity received in excess of the PO will not be paid for unless agreed in writing.
Rates are firm for this order and include packing.
Your invoice must show our GSTIN correctly; an incorrect invoice will be returned for correction before payment.
If you are registered under Udyam as a micro or small enterprise, please mention your Udyam number on the invoice.

The last line matters because payments to micro and small suppliers have a legal time limit; see the MSME 45-day payment rule.

Matching the PO, receipt and bill

Before the bill is booked or paid, compare three documents: the PO, what was actually received (your goods receipt note or the signed challan), and the supplier's invoice. This three-way match catches most purchase errors.

Quantity billed is not more than quantity received.
Rate billed equals the PO rate.
GST type is correct for the supplier's state and yours.
Freight is not billed if the PO said freight paid by supplier.

When something does not match, ask for a corrected invoice or a credit note before you pay, not after.

Amending or cancelling a PO

Plans change: a customer cancels, prices move or the supplier cannot deliver on time. Do not edit the original PO silently. Issue an amendment with the same number and a suffix, such as PO/25-26/0057-A1, listing only what changed: Qty of 16 L buckets reduced from 600 to 450; delivery date extended to 22-11-2025; all other terms unchanged. Send it the same way you sent the PO and ask for a reply confirming it.

To cancel, send a short written cancellation before dispatch and keep the supplier's acknowledgement. If goods have already left their godown, agree in writing who bears the freight both ways. These small records save long arguments when the ledger is reconciled at year end.

Good habits

Use a separate PO series per financial year, such as PO/25-26/.
Close or cancel old POs that will never be supplied, so pending orders stay honest.
Review open POs weekly against expected stock.
Share the PO as a PDF rather than a photo of a handwritten page.

Doing this with Tally and Cashflow OS

Cashflow OS includes purchase orders as a document, built from your Tally items and supplier ledgers, with your logo, letterhead and signature, shared as a PDF on WhatsApp or email. If you track pending orders in TallyPrime, a purchase order voucher can be created from the phone through the connector, and later a receipt note and purchase voucher as the goods and bill arrive.

Avoid these

Common mistakes

MistakeOrdering only by phone call or voice note
Do this instead
Send a written PO as a PDF so both sides can point to the same quantity, rate and terms.
MistakePaying bills without a three-way match
Do this instead
Compare the PO, what was received and the invoice for quantity, rate, GST type and freight before booking or paying.
MistakeEditing a PO silently after sending it
Do this instead
Issue an amendment with a suffix such as -A1 listing only what changed, and ask the supplier to confirm it.
MistakeLeaving dead POs open for months
Do this instead
Review open POs weekly and close or cancel those that will never be supplied, so pending orders stay honest.

Keep handy

Checklist

Purchase order format — 8 checks. Tick them as you go.

PO number in a separate series for each financial year
Your GSTIN and delivery address; supplier name and GSTIN
Supplier's quotation reference
Items with HSN, quantity, unit, rate and discount
Delivery date, freight and payment terms
Request to quote the PO number on invoice, challan and e-way bill
Request for Udyam number from micro and small suppliers
Open POs reviewed weekly against expected stock

In Cashflow OS

How Cashflow OS helps

Cashflow OS puts your TallyPrime books on every phone in the team. Where it fits this topic:

Purchase orders as branded PDFs

Make purchase orders from your Tally items and supplier ledgers with your logo, letterhead and signature, and share them on WhatsApp or email.

See Purchase orders

PO, receipt note and purchase in Tally

If you track pending orders in TallyPrime, create a purchase order voucher from the phone, then a receipt note and purchase voucher as goods and the bill arrive.

See Create Tally vouchers from your phone

Questions people ask

Is a purchase order mandatory under GST?

No. GST needs the supplier's tax invoice for credit, not a PO. A PO is a business control document.

Is a PO legally binding?

Once the supplier accepts it, by confirmation or by supplying against it, it is evidence of the agreed terms.

Should GST be shown on a PO?

Showing the expected GST helps both sides agree the total. The actual tax is decided on the supplier's invoice.

Can one PO be supplied in parts?

Yes. Track received quantity against the PO and keep it open until the balance is supplied or cancelled.

What is a three-way match?

Comparing the purchase order, the goods actually received and the supplier's invoice before the bill is booked or paid. It catches most purchase errors.

How do I cancel a PO already sent?

Send a short written cancellation before dispatch and keep the supplier's acknowledgement. If goods have left, agree in writing who bears the freight.

Why ask suppliers for their Udyam number?

Payments to micro and small suppliers have a legal time limit, so you need to know which suppliers are covered.

Should the PO show payment terms?

Yes. Writing the agreed credit period on the PO avoids disputes and matters for micro and small suppliers, where the period is capped by law.

This page is general information for Indian businesses, not tax, legal or financial advice. Rules and rates change — check the official portals or your CA before acting.