Debit Note and Credit Note come into the action when some error has been committed during a financial transaction. The mistake can be simply human error or due to some mechanical fault. To neutralize the effect of this error on the invoices, a Debit Note or a Credit Note is issued. These documents are recognized and accepted when you prepare GST (Goods and services tax) Invoice. They are not only in India but also used across the globe in GAAP Accounting. Any errors in invoices can be revised with the assistance of these notes.


When is the Debit Note issued?

Generally, you will issue a Debit Note when the amount payable to the other has reduced. Let’s understand the scenarios leading to get GST Invoice revised, by issuing a Debit Note.

Issued by the Buyer:

debit note

debit note: buyer to issue: Legal Raahi

    • In cases where the amount of the goods or services has changed after they have been delivered. It is issued by the buyer, seller or supplier, when he comes to know that the amount or the tax charged is greater than the actual value or actual tax payable with respect to such supply. This is issued after the Sales Invoice has been raised for a previous transaction.
    • When the fees charged or interest charged are greater than the earlier agreed amount. An organization may need to issue a Debit Note to correct the error in sales, purchase or loan invoice.
    • Also, in situations, when products and services are to be returned, in part or whole, or the cost have undergone a revision. These situations may occur due to the goods not being up to the mark or found in less quantity. Now the buyer requires to validate the amount, whether reimbursed or waiting to be reimbursed in his accounting. In such a case too, the receiver issues a this note showing this accounting transaction.
    • An organisation might issue a this instrument in response to a received credit note.


    Issued by the Seller:

    • A seller, may also issue a Debit Note in certain situations who has GST Registration. For example, if some additional quantity has been delivered by mistake. Or an incorrect value, (amount or tax) was entered in the invoice. In such situations, the supplier will issue a Debit Note. So that the buyer’s account will show a debit balance in his Bookkeeping and Accounting.
    • It will only be considered for revision in the values of an invoice, furnished by a seller, under the GST law. The same has to be accepted by the buyer for a corresponding impact on Input Tax Credit on the supply.


    Details to be covered in a Debit Note

    The Debit Note must show details of the amount of money to be debited from the seller’s a/c. Also, it must be accompanied by a reason for the same.

debit note

debit note: a Sample Format: Legal Raasta

As per the Rule 53, of GST Act, although there is no format for a Debit Note, some details have been specified which are as follows:

  1. Name, address and Goods and Services Identification Number (GSTIN) of the supplier
  2. Nature of the document
  3. A unique and consecutive serial number for each financial year
  4. Issue date of the Debit Note
  5. Goods and Services Identification Number (GSTIN), name and address of the buyer, in case he/she doesn’t have GST Registration, then his/her Unique ID Number
  6. The address of delivery, with the name of the State and its code
  7. Details (Date and Serial Number) of the GST Invoice or the bill of supply, against which the Debit Note has been raised
  8. The taxable value of products and/or services
  9. Tax rate and the amount of the tax charged
  10. A signature or Digital Signature of the seller or his authorized representative.


Applicable Time-Lines under GST

Once the corresponding Sales Invoice has been raised, this document can be issued anytime without any time limit. The details or information have to be declared, during GST Filings, on

  1. September, following the end of the year in which such sale was made or
  2. the date of filing of the related annual return

Whichever is earlier.

In the GST Return Filing Forms, the tax liability can be adjusted against the Sales Invoice. But any reduction in the output tax liability of the seller will not be allowed. Especially when the tax and interest on such sale have already been passed on to any other individual.

The records of the Debit Note must be kept at least up to 72 months, from the due date of the filing of the related annual return.

For more about GST click here.