What a purchase order should include
- Buyer and vendor names, addresses and GSTINs.
- A unique PO number and date, so the vendor can quote it on their invoice.
- Each item with its description, HSN code, quantity, unit, agreed rate and GST rate.
- Delivery date and delivery address.
- Payment terms, and terms for quality, test certificates and rejections.
- The signature of the person authorised to approve purchases.
Why every purchase needs a PO
A purchase order is the buyer's written commitment to buy at an agreed price. It is the first of the three documents accounts matches before paying a vendor: the PO, the goods receipt note (GRN) and the vendor's invoice. Without a PO, there is nothing to check the bill against.
See our guide to procure to pay for the full process, with a three-way matching example.
GST on a purchase order
A PO does not create a GST liability; the vendor's tax invoice does. The GST shown on a PO is the expected tax, so both sides agree the landed cost upfront. When the vendor is in another state, the PO shows IGST; when in the same state, CGST and SGST.