Complete insights into Debit Note: FAQs

When is a debit note issued under GST?

A debit note is issued in instances when a customer owes money to the supplier. Debit notes should be issued in cases such as:

• When a supplier undercharges a customer for the goods and services provided.
• When the tax rates are lower than what is applicable for the goods and services.
• When the customer receives more goods and services than what specified in the tax invoice. 

What is the format for a debit note?

Every debit note must contain the words Revised Invoice and the following details:

• Both the supplier’s and customer’s name, address and GSTIN 
• The purpose and date of issuing the document.
• A serial number consisting of a unique combination of only numbers, alphabets and the special characters - and /.
• The state and state code of the customer, if they are not registered under GST.
• The date and serial number of the original corresponding tax invoice or bill of supply.
• The original and rectified prices or tax rates charged, along with the amount of tax debited to the recipient.
• Signature of the recipient.

How do debit notes affect the supplier’s tax liability? 

Issuing a debit note further increases tax liability. As far as tax returns and payments are concerned, a debit note is treated the same as a tax invoice.

When should the details of a debit note be provided?

Details of a debit note must be declared by the supplier while filing returns for the month it was issued in, either by September after the financial year in the transaction took place or by the annual return file date, whichever comes first.  

There is no deadline to issue a debit note, but once issued, the supplier must declare it in their monthly return no later than the following month.

Do debit note records need to be maintained?

All records and data related to a debit note must be preserved and kept accessible for both physical and digital use until their expiry, which is 72 months from the date of providing the relevant annual returns.

When is a debit note not eligible for input tax credits?

A debit note is not eligible for input tax credits if:

• There are any unpaid taxes, short paid taxes, incorrect refunds, fraudulent ITC utilisation, intentional provision of fake details, or omission of facts. (SECTION 74)
• Goods or vehicles have been seized at a transit point. (SECTION 129)
• Penalties have been levied on goods or vehicles. (SECTION 130)

In these cases, the document must state ‘INPUT TAX CREDIT NOT ADMISSABLE’. 

In case credit notes must be issued for multiple invoices, what can be done?

A registered person can now issue a consolidated debit note instead of individual debit notes, for the multiple invoices that they have sent throughout a financial year.