Credit Note and Debit Note
Under GST

Importance of Credit Note

For Registered Suppliers at the season of supply of Goods it is obligatory to issue an tax invoice.

In any case, there can be sure circumstance under Trade and business where invoice which is issued at the season of offer should be revised.

There can be 2 circumstances

Either invoice sum needs to decreased
Or on the other hand Invoice sum needs to expanded

What is a Credit Note?

Where a tax invoice has been issued for supply of any products or administrations and the taxable esteem or tax charged in that tax invoice is found to surpass the taxable esteem or tax payable in regard of such supply, or where the merchandise provided are returned by the beneficiary for example Deals Return, or where products or administrations or both provided are observed to be insufficient or not according to fulfillment of purchaser, the enrolled individual, who has provided such merchandise or benefits or both, may issue to the beneficiary/Buyer a note that is called as a credit note.

Circumstances under which Invoice sum should be decreased

The provider has wrongly announced an esteem which is more than the real estimation of the merchandise or administrations gave.
The provider has wrongly pronounced a higher duty rate than what is appropriate for the sort of the products or administrations or both provided.
The amount got by the beneficiary is not as much as what has been proclaimed in the assessment invoice.

The amount got by the beneficiary is not as much as what has been proclaimed in the assessment invoice.
Above, decrease in invoice sum can be made by issuing Credit Note.

What is a Debit Note?

At the point when a tax invoice has been issued for supply of any merchandise or benefits or both and the taxable esteem or tax charged in that tax invoice is observed to be not exactly the taxable esteem or tax payable in regard of such supply, the enlisted individual, who has provided such products or administrations or both, will issue to the beneficiary a note which is called Debit Note.

Circumstances under which Original Invoice sum needs to Increased:

The provider has wrongly announced an esteem which is not exactly the real estimation of the merchandise or benefits or both gave.

The provider has wrongly pronounced a lower tax rate than what is material for the sort of the products or administrations or both provided.

The amount got by the beneficiary is more than what has been proclaimed in the tax invoice.

Some other comparative reasons.
Above, Increase in unique invoice sum can be made by issuing Debit Note.

Format of Credit Note and Debit Note

There is no specific format of Credit Note and Debit Note but there are some compulsory fields which are required on credit note and Debit Note which is as follows:

Name, Address and GSTIN of supplier

Nature of document

Invoice number not exceeding 16 digits

Date of Issue

Name, Address, GSTIN of Buyer if registered name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered;

Serial number of original Invoice value of taxable supply of goods or services, rate of tax and the amount of the tax credited to the recipient; and

Signature or digital signature of the supplier or his authorized representative.

Circumstances under which Invoice sum should be decreased


The provider has wrongly announced an esteem which is more than the real estimation of the merchandise or administrations gave.
The provider has wrongly pronounced a higher duty rate than what is appropriate for the sort of the products or administrations or both provided.
The amount got by the beneficiary is not as much as what has been proclaimed in the assessment invoice.

The amount got by the beneficiary is not as much as what has been proclaimed in the assessment invoice.
Some other comparable reasons.
Above, decrease in invoice sum can be made by issuing Credit Note.

Time Limit of issuing Debit/Credit Note


Supplier who is issuing credit note/Debit Note will declare the details of credit note/Debit Note issued under GSTR-1 of that month or later but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier. But if credit note/debit note is issued after September or filings of annual return then it will be invalid.

By Issuing Credit note Supplier GST liability will reduce

For Example:

If Sales was Rs. 10,000/- and GST charged @ 18% so GST liability for that month was Rs. 1800/- and later Credit note of Rs. 5,000/- was issued so GST needs to pay only on Rs. 5,000 (10,000-5,000) i.e. Rs. 900/-
But, GST liability will reduce from Rs. 1800/- to Rs. 900/- if
Amount is matched with corresponding Reduction in Input Tax Credit made by Buyer in his GSTR-2.
If amount is not matched with corresponding Buyers GSTR-2 then it shall be communicated to both Buyer and supplier.


Conclusion-Credit Note

The credit note is therefore a convenient and legal method by which the value of the goods or services in the original tax invoice can be amended or revised. The issuance of the credit note will easily allow the supplier to decrease his tax liability in his returns without requiring him to undertake any tedious process of refunds.

By Issuing Debit note Supplier GST liability will Increase

The issuance of a charge note or an advantageous invoice makes extra tax risk.
The treatment of a charge note or a beneficial invoice would be indistinguishable to the treatment of a tax invoice the extent that profits and installment are concerned. Records
The Records of credit note and Debit Note will be held in any event upto 72 months from the due date of outfitting of yearly return for the year relating to such records and records.
Where such records and archives are kept up physically, it ought to be kept at each related spot of business referenced in the declaration of enrollment and will be available at each related spot of business where such records and reports are kept up carefully.

Conclusion-Debit Note

The debit note or a supplementary invoice is therefore a convenient and legal method by which the value of the goods or services in the original tax invoice can be enhanced. The issuance of the debit note will easily allow the supplier to pay his enhanced tax liability in his returns without requiring him to undertake any other tedious process.

Latest Articles




Impact of GST on your companys working capital

The GST system that will hit the market in less than 3 months will impact millions of businesses in India ...

What is the difference between GST and VAT

VAT is a consumption tax levied on a product at each stage of the supply chain where the value of the product ...

GST rate - What are SGST, CGST and IGST?

GST short for goods and services tax, will be applied to all items traded by suppliers registered under ...




GST Impact on Manufacturing Sector

The Manufacturing Sector is the largest economic growth sector in India ...

GST Invoice Format

As a registered dealer under GST you are required to create GST invoices for each sale you make. ...

GST Returns and their format

GSTR-1 and GSTR-2 are two monthly statements done by all normal registered taxpayers. These returns have...

GST Impact on Services
Service Sector in India is most prominent sector in India...



GST Impact on Startups

A proforma invoice is a preliminary invoice of sales that a business sends to buyers in advance of a ...

Article Img
GST Composition Scheme

Composition scheme is a simple scheme under GST that helps small businesses get rid of complicated ...

Article Img
Check genuine GSTIN number

GST bills have a complex structure and they require increased attention to details to ensure...

Article Img
GST guidelines do's and don'ts

GST has been a major change to the Indian economy and it holds many promises to streamline the taxation system ...




Article Img
GST on Credit Note and Debit Note

Exports of services attract zero rate GST, but in which cases are these services actually exported....

Article Img
Best GST software

What features should you consider when looking for a GST software for your small business and....

Article Img
GST export invoice

How to make export invoices and understand your export under Bond or letter of undertaking choice.....

Article Img
E-way bill in GST

All business that transport goods over a certain value are obligated to issue e-way bills for each of their.....

Start GST billing now


Find the best document creating GST software in India, smart and easy to use mechanism where you can easily do the document automation, document generation and invoice creation.

You will create all financial documents like GST tax invoice, challan, supplier bill, quotation, profarma invoice, excise invoice, retail invoice, purchase order, delivery note and more.