Introduction:

A supplier of goods or services or both is mandatorily required to issue a tax invoice. However, during the course of trade or commerce, after the invoice has been issued there could be situations like:

  • The supplier has erroneously declared a value which is less than the actual value of the goods or services or both provided.
  • The supplier has erroneously declared a lower tax rate than what is applicable for the kind of the goods or services or both supplied.
  • The quantity received by the recipient is more than what has been declared in the tax invoice.
  • Any other similar reasons.

In order to regularize these kinds of situations the supplier is allowed to issue what is called as debit note to the recipient. The debit note also includes supplementary invoice.

Debit Note in GST

Meaning:

When a tax invoice has 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 a debit note containing the prescribed particulars.

Format:

There is no prescribed format but debit note issued by a supplier must contain the following particulars, namely: –

a) name, address and Goods and Services Tax Identifica­tion Number of the supplier;

b) nature of the document;

c) a consecutive serial number not exceeding sixteen char­acters, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combina­tion thereof, unique for a financial year;

d) date of issue;

e) name, address and Goods and Services Tax Identifica­tion Number or Unique Identity Number, if registered, of the recipient;

f) 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;

g) serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;

h) value of taxable supply of goods or services, rate of tax and the amount of the tax debited to the recipient; and

i) signature or digital signature of the supplier or his au­thorized representative.

Tax liability:

The issuance of a debit note or a supplementary invoice creates additional tax liability. The treatment of a debit note or a supplementary invoice would be identical to the treatment of a tax invoice as far as returns and payment are concerned.

Records:

The records of the debit note or a supplementary invoice have to be retained until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records. Where such accounts and documents are maintained manually, it should be kept at every related place of business mentioned in the certificate of registration and shall be accessible at every related place of business where such accounts and documents are maintained digitally.

Conclusion:

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.

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Our Recommendation on GST

Sr No.  Particulars
1 Registration under GST Law
2 Cancellation of Registration in GST
3 The Meaning and Scope of Supply
4 Composite Supply and Mixed Supply
5 Time of Supply in GST
6 GST on advances received for future supplies
7 Concept of Aggregate Turnover in GST
8 Non-resident taxable person in GST
9 Casual taxable person in GST
10 Input Service Distributor in GST
11 Composition Levy Scheme in GST
12 Reverse Charge Mechanism in GST
13 Tax Invoice and other such instruments in GST
14 Accounts and Records in GST
15 Credit Note in GST
16 Debit Note in GST
17 Electronic Cash/Credit Ledgers and Liability Register in GST
18 Electronic Way Bill in GST
19 Input Tax Credit Mechanism in GST
20 Transition Provisions under GST
21 Integrated Goods and Services Tax Act
22 Compensation cess in GST
23 Imports in GST Regime
24 Zero Rating of Supplies in GST
25 Deemed Exports in GST
26 Pure Agent Concept in GST
27 Job Work under GST
28 Works Contract in GST
29 Valuation in GST
30 Margin Scheme in GST
31 Provisional Assessment in GST
32 Returns in GST
33 Statement of Outward Supplies (GSTR-1) in GST
34 Refunds under GST
35 Refund of Integrated Tax paid on account of zero rated supplies
36 Refund of unutilised Input Tax Credit (ITC)
37 Advance Ruling Mechanism in GST
38 Goods Transport Agency in GST
39 GST on Charitable and Religious Trusts
40 GST on Education Services
41 GST on Co-operative Housing Societies
42 Online Information Data Base Access and Retrieval (OIDAR) Services in GST
43 GST Practitioners
44 National Anti-Profiteering Authority in GST
45 Benefits of Goods and Services Tax (GST)
46 Special Audit in GST
47 TDS Mechanism under GST
48 TCS Mechanism under GST
49 Inspection, Search, Seizure and Arrest
50 Appeals and Review Mechanism under GST
51 Recovery of Tax
Prepared by: National Academy of Customs, Indirect Taxes & Narcotics
(Republished with Amendment as on 01.01.2018 – Source- CBEC)

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23 responses to “Debit Note in GST – All You want to Know”

  1. Amit Dahiya says:

    SIR, GOODS RETURN AGNST DEBIT NOTE,
    E WAY BILL MANDATORY AGNST DEBIT NOT ??????

  2. MOHIT NAHATA says:

    SIR I HAVE RECEIVED A DEBIT NOTE FOR MORE THAN ONE INVOICE BUT GST PORTAL ACCEPTS ONLY ONE DEBIT NOTE NO. AGAINST ONLY ONE INVOICE SO HOW SHALL I ADJUST THOSE REMANING INVOICE.

  3. Ankit says:

    Please guide regarding the treatment of
    discount credit note in gst

  4. SUMIT UNDERSAHARE says:

    if invoice is raised in July by supplier errorlously which is more than the value reqd. Return n is filled in August month and tax also paid. Then credit note issued by supplier in August reducing the invoice value. Then such note will be shown as sales return in August month return.
    Pls reply am I correct or not.

  5. AMARJIT SINGH says:

    Sir, We have received a price revision against the parts supplied to our customer during the period oct-16 to july-17, enhancing the rate from the billing rate.
    In GST, we have to issue a separate Debit Note against each invoice. The total no. of invoices is more than 1000.
    Is there any other method to settle the price difference instead of making 1000 no of debit note.
    Please suggest

    • DHRUMIT GANDHI says:

      I think if debit note is for return of the goods , which was early book as sale , than better is as customer to treat as sale .

      You should book as purchase.

      Debit note is again subject to acceptance by both the parties . better is to make it as sale that result into not much focus on transaction.

    • K.RAJU says:

      You may raise a separate Invoice for price difference.

      Invoice raised should contain HSN code of the principal goods supplied.

      Further, Invoice should clearly mention “Price difference for Invoice no.__, __”.

      In other words, this invoice (price difference) to clearly give reference of principal invoice no. of goods supplied.

      In the GST return, these invoices raised to be shown against “B2B supplies” and not against “Debit note/credit note issued”.

  6. KK Agrawal says:

    A separate article needed to explain the Dr Note from Recipient. This could be due to price difference, poor quality of material supplied,deduction for delayed supply or shortage found is consignment etc. These need to be addressed to.

  7. E N THAMABI DURAI says:

    DEBIT NOTE will be issued by the Receiver for goods to returned

    • KK Agrawal says:

      For return of goods, tax invoice may be raised by sender (original recipient) to original supplier.Although it will create accounting problem because it is not a sale but is purchase return.Further solution needed in GSTR 1 and 2 to show Purchase Return.

  8. Bhupinder Singh AUlakh says:

    How a co. can provide services to the customers after sale under warranty in agriculture sector during the peak season with spares and services under GST SYSTEM.

  9. Mahesh Jindal says:

    This article is good but but nothing mentioned about for issuance of time line. Request to please clarify the same.

    Thank you.

  10. Saksham sood says:

    Sir if invoice is raised in July by supplier errorlously which is more than the value reqd. Return n is filled in August month and tax also paid. Then credit note issued by supplier in August reducing the invoice value. Then such note will be shown as sales return in August month return.
    Pls reply am I correct or not.
    Thanks in advance

  11. Sumit shete says:

    Please guide regarding the treatment of
    discount credit note in gst.

  12. Sumit shete says:

    Please guide regarding the treatment of
    discount credit note in gst

  13. Vijay B. Ranadive says:

    Whether Debit Note issued for Purchase Return?

  14. Salil Jain says:

    Please let us know the procedure and documentation to be followed by a trader for returning goods to the supplier.

    Thanks

  15. Thambidurai says:

    Good information.

  16. Prahlad Rungta says:

    What is the treatment of credit note in gst

  17. pukhraj jain says:

    Good information.pl suggest about debit note by recipient.

  18. Jayendra says:

    Sir,
    when we open the link, we are disturbed by audio visual advertisement. You may re-think to at least remove the audio disturbances
    Regards

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