What Are They Under GST?
1. Credit Note
- Issued by the seller when goods/services are returned, overcharged, or taxed more than required.
- Reduces buyer’s obligation and the seller’s GST liability.
- Triggers reverse accounting entries: buyer’s GST credit and seller’s output tax drop.
2. Debit Note
- Issued by the supplier when an invoice undercharges or additional charges/items are added.
- Increases buyer’s payment and the seller’s tax liability.
- Buyer gets additional tax credit, seller reports more output tax .
Key Differences
| Feature | Credit Note | Debit Note |
|---|---|---|
| Issued by | Seller | Seller |
| Purpose | Lower invoice value or tax | Raise invoice value or correct errors |
| Effect | Decreases tax liability | Increases tax liability |
| Usage example | Goods returned; overcharge refund | Undercharged; extra goods delivered |
📝 Formats & Content Requirements
- Required fields include:
- “Credit Note” or “Debit Note” label
- Serial number, date, supplier & recipient GSTIN
- Details of original invoice (number, date)
- Revised taxable value, tax rates, and adjustment amount
- Signature or digital signature by supplier
Timing & Reporting
- No strict issuance deadline, but must be reported in the GST return of the month issued, or by September or filing of Annual Return, whichever is earlier.
3. Revised Invoice
- Used when the original invoice was issued before GST registration (during provisional registration period).
- Must be reissued within 30 days of receiving GST certificate.
- Updates include adding GSTIN, HSN/SAC codes, correct billing details.
When to Use Each
- Credit Note: For returns, discounts given later, or overcharge adjustments.
- Debit Note: For undercharges, more items sold, or additional costs.
- Revised Invoice: Solely for correcting invoices issued during pre-registration stage.
Why They Matter
- Ensures correct GST compliance and accurate input credit for buyers.
- Maintains transparency in B2B invoice matching via GSTN portal.
- Helps avoid penalties and mismatches in tax returns.
Summary
- Credit Note → lowers tax/invoice amount
- Debit Note → increases tax/invoice amount
- Revised Invoice → updates pre-registration invoices post cert.
- All require proper format, reporting deadlines, and adjustment in GSTR returns.
