Purchases & Expenses
Money also goes out — to suppliers for stock, and on overheads like rent and transport. Recording it keeps three things right: your Input Tax Credit (the GST you can reclaim), your payables (what you still owe), and your true profit. This guide shows the simple difference between a "bill" and an "expense", and how to record both.
Read this first — bill vs expense
- Purchase Bill = goods/stock you buy from a vendor (so inventory and ITC update). Example: 100 t-shirts from a wholesaler.
- Expense = overheads to run the business. Example: shop rent, electricity, transport.
- Recording isn't paying. An unpaid bill/expense sits in your payables until you record the payment — so you always know what you owe.
- ITC needs a proper GST bill. Enter the vendor's GSTIN and tax correctly to reclaim the GST you paid.
What this covers
| Document | Use it for | Plan |
|---|---|---|
| Purchase Bill | Record a vendor's bill and claim ITC | Shuruat |
| Expense | Category-wise spending (rent, transport…) | Shuruat |
| Purchase Order (PO) | Order goods before the bill arrives | Pragati |
| GRN (Goods Receipt) | Confirm goods received against a PO | Pragati |
| RCM Expense | Reverse-charge on imports / OIDAR | Samridhi |
- ITC is only as good as the bill. Enter the vendor GSTIN and GST correctly, or you can't reclaim it.
- Recording ≠ paying. Mark a bill paid only when money actually leaves; otherwise it stays in payables.
- POs & GRN are Pragati+; RCM is Samridhi+.
- Expenses can carry GST — add a GST rate when the spend has claimable tax.
Record a purchase bill — step by step
Open Purchases → New Bill
Go to 🛒 Purchases and start a Purchase Bill.
Pick the supplier
Choose a vendor — their GSTIN and details auto-fill. Add the vendor's bill number and date.
Add items
Add the items bought, with quantity, rate and GST. If you track stock, they're received into inventory.
Check ITC & total
The form shows taxable value, GST (your ITC) and total payable.
Record payment & save
Mark it paid (Cash/UPI/Bank) now, or leave as payable, then Save.
help-shots/pe-01-list.png
help-shots/pe-02-bill.pngRecord an expense — step by step
Open Expenses → Add Expense
Pick a Category — Rent, Electricity, Transport, Marketing, Professional Fees, Bank Charges, Freight, Utilities, Miscellaneous, and more.
Enter amount & payment
Add the amount, payment mode and date. Add a GST rate if the spend has claimable tax, and the vendor if relevant.
Attach & save
Optionally attach a receipt and mark it recurring if it repeats monthly, then Save.
help-shots/pe-03-expense.pngPurchase Orders, GRN & vendor payments
On Pragati+ you can raise a Purchase Order, then record a GRN when goods arrive — a three-way match between PO, receipt and bill that catches short deliveries and price differences. Vendor payments and any approvals are tracked, and unpaid bills appear in your payables and creditor-aging reports.
Real situations
📖 Buying stock
Anil buys 100 t-shirts from a wholesaler. He records a Purchase Bill against the vendor with GST — his stock goes up by 100, his ITC is captured, and the bill sits in payables until he pays.
📖 Paying the rent
For monthly shop rent, Anil adds an Expense under "Rent", marks it recurring, and attaches the receipt. It flows into his P&L without touching inventory.
📖 Ordering ahead with a PO
Before a festival, Anil raises a Purchase Order (Pragati) to his supplier. When the goods arrive he records a GRN, then converts it to a bill — quantities and prices already matched.
Words you'll see, in plain language
| Term | What it means |
|---|---|
| ITC | Input Tax Credit — the GST you paid on purchases, which offsets the GST you collected on sales. |
| Payable | Money you owe a vendor for an unpaid bill/expense. |
| PO | Purchase Order — a formal order placed with a vendor before the bill. |
| GRN | Goods Receipt Note — confirms what actually arrived against a PO. |
| RCM | Reverse Charge Mechanism — where the buyer (you) pays the GST, e.g. on imports/OIDAR. |
Troubleshooting
| What you notice | Why | What to do |
|---|---|---|
| ITC not reflecting in GST | GST/GSTIN missing on the bill | Edit the bill; add the vendor GSTIN and correct GST |
| Stock didn't increase after a purchase | You used an Expense, or the item isn't tracked | Use a Purchase Bill with tracked items |
| A vendor balance looks wrong | Bill recorded but payment not (or vice-versa) | Record the matching payment; check the vendor ledger |
| Not sure: bill or expense? | Goods vs overhead | Goods/stock → Bill; rent/utilities/transport → Expense |
Best practices
- Record bills with GST so your ITC is always captured.
- Keep unpaid bills as payables — don't mark paid until money moves.
- Use categories consistently so expense reports are meaningful.
- Mark genuinely recurring costs as recurring to save re-entry.
FAQ
What's the difference between a bill and an expense?
Use a Purchase Bill for stock/goods (so inventory and ITC update). Use an Expense for overheads like rent, utilities or transport.
How do I claim Input Tax Credit?
Record the purchase bill with the vendor's GSTIN and correct GST; the ITC then offsets your output GST in the GST reports.
Can I track money I still owe vendors?
Yes — unpaid bills stay in payables. See Outstanding Payables and Creditors Aging in CA Reports.
Can I attach the vendor's receipt?
Yes — attach it on the expense for your records.
- Parties → vendors and their balances.
- Items & Inventory → stock received on bills/GRN.
- GST → Input Tax Credit against output GST.
- Reports → Purchase Register, Expense Register, Creditors Aging, Cash Book — see CA Reports.
📸 Screenshot capture checklist
Drop each PNG into help-shots/ with the exact filename and it appears automatically.
| # | Screen to capture | Save as |
|---|---|---|
| PE-01 | Purchases list (New Bill / New PO) | help-shots/pe-01-list.png |
| PE-02 | New purchase bill (vendor + items + ITC) | help-shots/pe-02-bill.png |
| PE-03 | Add expense form | help-shots/pe-03-expense.png |
Tip: use a sample vendor; blur real GSTINs and amounts.