Debit Note in GST

| Updated on: March 19, 2021


In order to clearly understand the concepts of debit and credit note in GST we have to let go of our understanding of debit note under erstwhile laws and begin with a new slate. A debit and credit note, for the purpose of the GST Law, can be issued by the registered person who has issued a tax invoice, i.e., the supplier.

Any such document, by whatever name called, when issued by the recipient to the registered supplier, is not a document recognized under the GST Law.

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When is a Debit Note Entry Passed in the Books

Debit and credit note in GST causes some hardship to quickly understand – as who owes whom. A debit note in GST is issued when any money is ‘OWED’ to the issuer, that is, it is again issued by the person who is the receiver of money.

For example, supplier charges a penalty for delayed payment of consideration, the supplier would issue a debit note for the amount of penalty, to the customer to declare that money is ‘OWED’ to the supplier.

Then, the original amount due PLUS the debit note is the revised value of supply, that the customer pays the supplier. To this extent, the GST thereon would also stand increased.

Conditions Which Must Be Satisfied for Issuance of Debit Note in GST

The conditions applicable on an issue of debit note in GST are listed below:

  • Actual value of supply is higher than that stated in the original tax invoice;
  • Tax charged in the original tax invoice is lower than that applicable on the supply;
  • The debit note needs to be linked to the original tax invoice;
  • The debit note contains all the applicable particulars as specified in CGST rules;
  • A debit note issued under

Section 74

Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful misstatement or suppression of facts

Section 129

Detention, seizure and release of goods and conveyances in transit

Section 130

Confiscation of goods or conveyances and levy of penalty

  • In all the above scenarios, the recipient would not be entitled to avail credit in respect thereof, and the supplier shall specify prominently, on such debit note stating that the tax credit is inadmissible.
  • It may also be noted that no time limit has been prescribed for issuing debit notes. Meaning, a debit note in GST may be raised and uploaded subsequently, with no restriction as to the time period for doing so.

Debit Note Format under GST

The debit and credit note format in GST shall be furnished with the following details

  • name, address, and GSTIN of the supplier,
  • nature of the document,
  • a consecutive serial number containing only alphabets and/or numerals, unique for a financial year,
  • date of issue of the document,
  • name, address and GSTIN/ Unique ID Number, if registered, of the recipient,
  • name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered,
  • serial number and date of the corresponding tax invoice or, as the case may be, bill of supply,
  • the taxable value of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient, and
  • the signature or digital signature of the supplier or his authorized representative.

Debit Note in GSTR1 Return

Since debit notes are a major change to an invoice, they have to be reported separately in the GST returns to ensure a free flow of credits to the last mile in a GST environment.

The supplier shall mention the details of debit and credit note in form GSTR 1. On filing the details it will get auto-populated in form GSTR 2A for the recipient. The recipient can either modify or accept or reject these details and file form GSTR 2.

How to Pass Debit Note Entry in Tally.ERP 9

Debit and Credit Note in GST is a part and parcel of daily transactions of any business. In business parlance, we can say that debit and credit note is issued when there are sales returns or purchase returns.

For using debit and credit notes in Tally, you would have enabled them.

  • To enable the option for debit and credit notes in Tally, follow the steps below.
  • From Gateway of Tally, press F11 – Shortcut for Company Features
  • Now select, Accounting Features.
  • Under Invoicing, set the option Use debit/credit notes to YES.
  • Also set YES for "Use invoice mode for debit notes"

Now for passing a debit note entry in Tally.ERP9, follow the given steps :

Step 1: Go to Accounting Vouchers from Gateway of Tally.ERP 9

Step 2: Now select debit Note from the left-hand bar or simply press CTRL + F9 which is the shortcut for Debit Note.

Step 3: Begin entering the details of debit note which is needed to be prepared and click yes after passing the entry for accepting the entry fed by you.


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