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    a debit note may be issued: Input tax credit and Interest applicability on Debit notes

    annual return

    The company may need to issue the debit note to its supplier when it needs to return the purchased goods for some reason. In this case, it needs to make a debit note journal entry to reflect the amount that should be debited in the company’s account. A debit note’s inclusion in the information for GSTR-1, the month in which the supply of goods occurred, is one of its fundamental roles under GST. The same information appears on Forms GSTR-2A and GSTR-2B for the recipient.

    Hence, GST paid on supply to the unregistered persons cannot be adjusted against other GST liability. The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services.

    Before or on September 30th of the fiscal year that comes after the one in which the goods and services were provided. Use AI & ML powered OCR software or APIs to extract data from Invoices. The signature / digital signature of the supplier / authorized representative.

    • From day to day bookkeeping to managing sales and purchase invoices, from inventory management to real-time tracking, data security to import articles, Imprezz takes care of all.
    • When the credit note is received from the supplier, the same is marked off against the debit note in the debit note book, thus enabling a system of efficient tracking and balancing.
    • Debit Note is issued when any money is OWED to the Issuer.
    • The Law Committee examined the matter and felt that credit may be allowed for debit notes irrespective of the date of issuance of the underlying invoice as anyway interest is being paid when tax liability is discharged in case of debit note.
    • You can use it when you want to adjust a debit note to its specific invoice.

    Tax liability, interest charges, and penalties will increase if the debit note is not issued within the allotted time. For an efficient tracking system, a credit note from a supplier is marked in the debit notebook against the debit note. A conjoint reading of rules 138A and 138A of CGST Rules, 2017 clearly indicates that there is no requirement to carry the physical copy of tax invoice in cases where e-invoice has been generated by the supplier.

    Who can issue debit note?

    Thus, a supplier can easily enhance the outward tax liability in his returns without undertaking any other strenuous process by issuing a debit note. A debit note can be issued by a buyer to the seller requesting the return of the partial or whole amount of payment already made. It could be due to incorrect or damaged goods received or cancellation of the order, or other special circumstances.

    Therefore, if no conditions are fulfilled or if only one of the two conditions are fulfilled, then the amount paid or payable shall not be considered as transaction value and recourse to Section 15 will be taken. The discount so offered or price reduced for supply to the consumers is compensated by the manufacturer/ distributor at a pre agreed rate or at an agreed value later. Credit Notes were popularly used for accounting of discounts in the pre-GST regime since discounts are inherent part of any commercial transaction. Discounts go on to reduce the amount recoverable from the customer. However, it is noteworthy that all discount shall not result in reversal of corresponding GST applied on them. Discounts can be classified in two broad categories –Pre supply discounts and Post Supply Discounts.

    Understanding Debit Note

    A debit note serves as evidence of a purchase return in the buyer’s accounting books. On the other hand, a credit note is proof of a sales return. Debit notes are usually issued to rectify erroneous values recorded in previous invoices.

    month of september

    The invoice may require changes for errors in the invoice, excess goods supplied, or goods returned due to defects or other reasons. A sales invoice is used when payment has already been made for the sale. If the buyer does not issue a debit note within the stipulated period, the tax liability, interest levy, and penalties will increase. A customer can issue a debit note if they purchase goods from a seller or supplier and want to return them for any valid reason.

    If the buyer considers the product unsatisfactory and wishes to refund the payment to the seller before or after the auction, the customer must produce the debit notes. If there is a transaction refund, a debit note is issued to reduce receivables, and a credit note is issued to reduce payables. In response to the buyer’s debit note, the seller might initiate the refund by issuing a credit note against the existing purchase invoice. Using our free software, you can easily manage your company’s accounts. It enables you to generate quotations, estimates, and accurate GST invoices. The app’s billing software allows you to convert invoices into debit notes easily.

    Your form has been submitted

    Through a debit note, the customer lets the seller know that s/he is returning certain goods bought by them. The credit note, on the other hand, lets the customer know that the money for which the debit note was sent, is being returned. It is issued when, as a customer, you receive goods or services that may not be of expected standard while you are in receipt of the final invoice from the seller. As a buyer of goods from a supplier, if you would like to return the purchased goods for any valid reason, you can issue a debit note. However, once a debit note is issued, the supplier should declare it to their monthly return no later than the following month. The supplier should furnish details of a debit note while filing returns for the month in which the debit note was issued.


    It is a document that is issued by the seller to indicate a full or partial return of funds. It may arise in the event of an incorrect or damaged supply of goods, cancellation of a purchase or an invoice error. It is usually raised in response to a debit note from a customer. This document can also be used by the customer or purchaser against a future order.

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    Debit Note is a document sent by a _____ to confirm the details of goods returned. Debit notes only come into play when credit sales are made. A Credit Note and Debit Note for the purpose of GST Law, can be Issued by the Registered Person who has issued the tax Invoice i.e.

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    It is also very efficient to convert https://1investing.in/ invoices into bills to help adjust auto stock. There are two options available to do the entry for debit notes. An invoice records a sales transaction that has been completed. Debit notes provide information about past transactions that remain unpaid.

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    The delinking amendment also impacted the treatment of Input Tax Credit for debit notes. Before the change, the deadline for filing an ITC claim was based on the date of the invoice rather than the day the debit note was issued. However, due to the amendment, the time limit for claiming ITC is now calculated based on the debit note date. A debit note is a type of commercial document that typically specifies any necessary adjustments to the amount of an invoice. Supplementary invoices are another term for debit notes.

    Expression “a debit note may be issued note” shall include a supplementary invoice. A debit note issued by the supplier increases the output tax liability of the supplier. This is on account of the value of taxable goods charged in the invoice to be less than the actual delivery of goods or services. Such a supply would demand supplementary invoice to be raised for the amount of goods not charged originally. Thus, the supplier needs to showcase the document in the return for the month in which such a debit note or supplementary invoice is issued.

    The exact details are part of the recipient’s Form GSTR-2A and GSTR-2B. Once the verification is done, the recipient can accept it and submit it as part of his GSTR-3B. A change in the taxable value of the goods or services after the invoice is issued. A debit note is a type of purchase return that happens when the amount reflected is positive. A debit note is a simple way to keep track of money owed. The person who owes the money is debited, and the account to which the money is owed is credited.

    For example, if a company sublets some of its warehouse space, it might issue a debit note for the rent. Debit notes might also be used to correct mistakes in invoices. If a client is underbilled on an invoice, for example, a debit note might be issued for the missing amount that should have been billed. A debit or credit note issued by a recipient to a supplier will not be considered a legal document as per GST law.

    When the shipment arrives at the customer, you can use Vyapar’s free billing app to convert your delivery invoice into an invoice. It will enable you to receive payments in various ways, avoiding late payments. A debit note forms part of the details concerning GSTR-1, the month in which the supplier supplied the goods.

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