Article explains  Definitions  of Credit Note and Debit Note under GST,  Issuance of Credit Note – Section 34(1),  Issuance of Debit Note – Section 34(3), Format of Debit Note and Credit Note, Details of Credit Note to be furnished in return – Section 34(2), Details of Debit Note to be furnished in return – Section 34(4) and also contains updated Extract of Section 34 of CGST Act 2017.

Credit Note and Debit Note under GST

1. Definitions

1.1 Credit Note – Section 2(37) 

means a document issued by a registered person under sub section (1) of Section 34 of CGST Act, 2017.

1.2 Debit Note – Section 2(38)

means a document issued by a registered person under sub section (3) of Section 34 of CGST Act, 2017.

2. Issuance of Credit Note – Section 34(1)

Where a Tax Invoice has been issued for supply of goods or services or both and;

  • the value declared in the invoice is more than the actual value of the goods or services provided; or
  • the rate of GST or Tax amount charged is at a higher  rate than what is applicable for the kind of goods or services supplied; or
  • the quantity received by the recipient is less than what is mentioned in the tax invoice; or
  • the goods supplied are returned by the recipient;

then the registered person, who has supplied such goods or services or both, shall issue a Credit Note to the recipient.

Once the Credit Note is issued, the tax liability of the supplier will reduce.

3. Issuance of Debit Note – Section 34(3)

Where a Tax Invoice has been issued for supply of goods or services or both and;

  • the value declared in the invoice is less than the actual value of the goods or services provided; or
  • the rate of GST or Tax amount charged is at a lower rate than what is applicable for the kind of goods or services supplied;

then the registered person, who has supplied such goods or services or both, shall issue a Debit Note to the recipient.

Once the Debit Note is issued, the tax liability of the supplier will increase.

4. Format of Debit Note and Credit Note

There is no prescribed format for Debit/Credit Note. However, it must contain prescribed Particulars same as a Revised Tax Invoice which includes the following:

  • The word “Debit Note” or “Credit Note” indicated prominetly
  • Name, Address and GSTIN of the Supplier
  • Nature of the document
  • A consecutive serial number not exceeding 16 characters, containing alphabets or numbers or special characters, unique for a FY
  • Date of issue of the document
  • Name, address and GSTIN or UIN of the recipient (if registered)
  • Name and address of the recipient, along with the address of delivery (if unregistered)
  • Serial no. and date of the corresponding Tax Invoice
  • Value of Taxable supply of goods or services, rate of tax and the amount of tax credited/debited to the recipient
  • Signature/ Digital signature of the supplier or hiss authorized representative

5. Details of Credit Note to be furnished in return – Section 34(2)

Any registered person who issues a credit note shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than

  • September following the end of the financial year in which such supply was made; or
  • the date of furnishing of Annual return,

whichever is earlier, and the tax liability shall be adjusted in prescribed manner.

6. Details of Debit Note to be furnished in return – Section 34(4)

Any registered person who issues a debit note shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in prescribed manner.

7. Extract of Section 34 of CGST Act 2017

Section 34 of CGST Act 2017: Credit and Debit Notes (CHAPTER VII – TAX INVOICE, CREDIT AND DEBIT NOTES)

(1) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.

(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued 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, and the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

(3) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient one or more debit notes for supplies made in a financial year containing such particulars as may be prescribed.

(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed.

Explanation: For the purposes of this Act, the expression “debit note” shall include a supplementary invoice.

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35 Comments

  1. Swamy says:

    we raised the invoice in FY17-18 without GST. but we need to given not GST invoice for same. how to create debit note only GST amount

  2. swamy says:

    I have raised the invoice in 17-18 as income with GST amount. we come know now we need charge GST amount. how to raise the debit note only for GST amount.

  3. DEEPAK KUMAR says:

    During the FY 2018-19 I have shown tax on credit note issued as input in GSTR-3B and accordingly the outward tax has not been reduced, the time for claiming of input tax has been expired as the last date was 30th sep 2019, now how i can rectify the same?

  4. SHAH MINESH says:

    Credit Note is received from our Supplier on account of post Sale Discount / Incentive. They have shown in their GSTR1 and it is reflected in our GSTR2A.
    Now how to show in our GSTR 3B and GSTR1.

  5. Prachee says:

    we are manufacturing unit , third party labors who work inside the plant are eating in the canteen. can we raise a debit note to that third party with GST for the same

    1. Premkumar says:

      Credit Note is received from our Supplier on account of post Sale Discount / Incentive. They have shown in their GSTR1 and it is reflected in our GSTR2A.
      Now how to show in our GSTR 3B and GSTR1.

      1. Kishan says:

        Credit Note is received from our Supplier on account of post Sale Discount / Incentive. They have shown in their GSTR1 and it is reflected in our GSTR2A.
        Now how to show in our GSTR 3B and GSTR1.

  6. santosh kumar says:

    if supplier issue me credit note or debit note than what liability of my we can issue aginst debit note and credit note plz sugess

  7. Parag says:

    We want to issue a rate different Debit note against our sales invoice issued before December-18, but GST rate changed on 01.01.19, we are confused what rate should be charge in debit note,
    1. new gst rate or
    2. gst rate as per original invoice

    Please guide on this matter.

    1. C.Mallikarjun Reddy says:

      Since in the instant case ToS is date of invoice, rate as applicable as on the date of invoice is to be adopted

  8. KHAGESWAR GAHIR says:

    i am working in cattle feed manufacturing company my question is about input on capital goods, what is the calculation for input tax credit because it supplies only exempted goods. please give any solution as soon as possible

    1. venkat says:

      You are not eligible to take Input credit due to your output product is exempted . So u have to take input and reverse the same in GSTR 3B

  9. Bhanu prakash says:

    Hi,
    As per the recent amendment we can raise single debit/credit note for multiple invoices. Is the portal accepting the single debit or credit note for multiple invoices now?

  10. veer says:

    In the case of sales return, the customer who returns will raise a debit note on the supplier for the return of goods. Is it right on the part of the customer to insist upon the supplier to issue a corresponding credit note? Will not , the issuance of corresponding credit note , be a redundant document – when the supplier accounts in his books as per the debit note raised by the customer and reflects the same in GST returns ? When both the parties issue and shows in the return – how it will get knocked off ? Pls suggest

    1. C.Mallikarjun Reddy says:

      Sir, GST provides for issuance of credit note or debit note by the supplier only and recipient has got only role of accepting or rejecting such credit or debit notes

  11. JASHMON says:

    If a sales return taken place after the filing of Annual return / sep month of subsequent year. Then what will be impact of the transaction.

    1. capankhuriagrawal says:

      The Original invoice detail will be entered in summary for B2B/B2C as per the given case.
      Details of Credit or Debit Note issued has to be filled in Credit/Debit notes section separately along with the reference to original invoice no.

    1. capankhuriagrawal says:

      Value declared as outward supply should be reduced by Value of Goods returned in GSTR 3B. Net amount should be shown

  12. Jayendra says:

    For Pharmaceutical industry and trade are given administrative relief to tide over the issue of destruction of time expired drugs.

    The GST Commissioner has clarified vide Circular No 72 that pharma dealers are given two options A & B. In option A,the returns and credit note shall be GST compliant with reveresal of tax where as in option B, a financial credit note for time expired drugs beyond stipulated period of 18 months without uploading it on GST portal and no reversal / adjustment of tax. This should have been covered in your article.

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