FAQs ON DEBIT NOTE AND CREDIT NOTE

• DEBIT NOTE:-

• A debit note is a document issued by the supplier in the following cases: Increase in Taxable Value. When a supplier requires to increase the taxable value of a supply, he/she has to issue a debit note to the recipient.

• When do we issue debit note in GST?

• Some of the common situations wherein the debit note is required to be issued are highlighted hereunder –
• The supplier has wrongly declared the taxable value which is less than the actual value of goods or services;
• The supplier has wrongly declared the lower tax rate as compared to the actual tax rate applicable to the goods or services;
• The quantity received by the recipient is more than the actual quantity declared by the supplier in the tax invoice;
• Any other similar reason.

• What is the time limit for issuance of debit note?

• Earlier of

• 1.On or before the 30th day of September of the financial year, which follows the year in which the goods or services were offered

• or
• 2. Date of furnishing of relevant annual return.

• EXAMPLE:-

• Mr. A (supplier) has issued a tax invoice to Mr. B (recipient). However, Mr. A erroneously declared the taxable value as INR 4,00,000 instead of the actual taxable value of INR 6,00,000. Now, Mr. A will issue a debit note for INR 2,00,000 charging the appropriate tax thereon.

CREDIT NOTE:-

A credit Note is a document issued by a registered taxpayer to adjust or reduce the tax liability due to errors or omissions in the original tax invoice. It includes information about the original invoice, the amount credited, and the reason for issuing the credit note

When do we issue credit note in GST?

1. The issued tax invoice has charged a tax amount that is more than the amount that should be payable due to such supply.

2. The receiver returns the supplied goods.

3. The supplied goods/services turn out to be deficient.

4. In any of the cases mentioned above, the recipient may receive a credit note under GST issued by the registered supplier of goods or services.

What is the time limit for the issuance of a credit note?

Earlier of

1. On or before the 30th day of September of the financial year, which follows the year in which the goods or services were offered

or

2. Date of furnishing of relevant annual return.

EXAMPLE:-

Mr. X (supplier) has issued a tax invoice to Mr. Y (recipient). However, Mr. X erroneously declared the taxable value as INR 10,00,000 instead of the actual taxable value of INR 9,00,000. Now, in such a case, credit note is to be issued by Mr. A for INR 1,00,000.