Debit Note

Debit Note Under GST

What is a Debit Note?

A debit note serves the purpose of accounting adjustment to deliver the correct amount of value and tax for any invoice issued in earlier periods.

Debit note is a document sent by the buyer to the seller, informing the seller that a debit has been made to the seller’s account. Debit notes are usually sent by a buyer to the seller if the good is to be returned or found unsatisfactory.

A debit note can also be sent by the seller to the buyer, informing the buyer that a debt has been made to the buyer’s account. The debit note can be issued to a buyer if the seller had erroneously undercharged the buyer or extra goods being delivered to the purchaser on the same invoice.

Under GST, a debit note can be issued if the following conditions are satisfied:

  1. There has been a supply of goods or services.
  2. Tax invoice has been issued for the supply.
  3. Taxable value or tax charged on the tax invoice is less than the tax payable for the supply or taxable value.
  4. Tax liability is required to be adjusted.

Debit Notes Under GST

GST takes care of all the changes made in a transaction. It is obvious to have a free flow of credits to the last mile in a GST environment. Hence, retailers and assessors have to follow a hard regime of uploading and updating every single transaction.

As per GST law, Debit notes can be raised in GST under two situations:

  1. When the amount of taxable value of the goods changes after issuance of invoice
  2. When a number of tax changes after issuance of invoice

The following things are to be maintained in the debit note, for proper update and reporting. Although there is no predefined format for the same, necessary care has to be taken to mention these important details in the debit notes.

  1. Name and address of the dealer supplying the goods and services
  2. GST Identification Number (GSTIN) of the supplier
  3. Nature of the document – capital letters and DEBIT NOTE in bold.
  4. Unique serial number assigned to the document
  5. Date of the document
  6. Name and address of the recipient of goods and services
  7. GST Identification Number (GSTIN) of the recipient
  8. When a recipient is an unregistered person, the name, and address of the place of delivery.
  9. The corresponding initial tax invoice to which the debit note relates to
  10. Changes in the taxable value of the goods or services, or changes in tax amount, as the case may be, for which such debit note is being raised.
  11. Physical signatures for paper-based documents or Digital signature for online debit notes.

The details of debit notes have to be declared in the following month on which such debit note has been raised. Debit notes can be issued anytime without any time limit.

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