What is the Meaning of Debit Note and Credit Note?

  • Blog|GST & Customs|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 25 April, 2023

Debit Note under GST:

A Debit Note is used to reflect that a debit has been effected to the account of the other party.

Credit Note under GST :

A Credit note is used to reflect that a credit has been effected to the account of the other party.  GST Law has however provided them legal recognition as a document on which tax incidence can be passed or excess tax can be refunded or credited back. Section 34 of CGST Act, 2017 details out the provisions on debit note and credit note.

When can a Credit note be issued?

A Credit note can be issued by the supplier of goods or services or both, to the recipient in the following situations: 

(i) Excess price or tax charged from the recipient: Taxable value or tax charged in tax invoice exceeds the taxable value or tax payable in respect of such supply,  

(ii) Goods returned: Goods supplied are returned by the recipient, 

(iii) Deficient Quality: Goods or Services or both supplied are found to be deficient.

When can a Debit note be issued?

Debit note can be issued by the supplier of the goods or services or both, to the recipient, when subsequent to the issue of tax invoice he comes to know that taxable value or tax charged in that tax invoice is less than the taxable value or tax payable with respect to such supply.

What is the time limit of issuance of Credit note and Debit note?

Issuance of Credit Note:

A supplier cannot issue a credit note pertaining to a supply of goods or services or both of a particular financial year later than the  (i) month of September following the end of the financial year in which such supply was made,    (ii) date of furnishing of the relevant annual return whichever is earlier  

Issuance of Debit Note:

There is no time limit for issuance of debit note.

Is the registered person who issues debit note/credit note supposed to declare them in his return?

Yes, supplier would have to declare details of such debit/ credit note in the return for the month during which such debit/credit note has been issued.    

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