A debit note has different uses in GST and in accounts. Its use in GST is of great significance to those involved in business transactions. Hence, to give a better understanding, below is an overview of debit note in GST and how it is different from those in accounts.
About a Debit Note
Accounting permits both the supplier and the recipient to raise a debit note. On the contrary, the CGST Act Section 34, 2017 only permits the supplier to issue the debit note to the recipient. Under GST, a recipient is not permitted to raise a debit note.
A tax invoice is mandatorily to be issued by the dealer supplying goods and/or services. Upon issuing a tax invoice, a debit note may be issued in the following situations:
- A value less than the actual value of goods and services being supplied has been declared by mistake
- A GST rate lower than the rate applicable on the goods and services being supplied has been declared by mistake
- Recipient has received more quantity of goods and services than was declared in the tax invoice
- Other reasons similar to these.
According to the CGST Act Section 34, 2017, a supplementary invoice should be included for the expression “debit note”.
Contents of a Debit Note
As per the CGST Rules Rule 53(1A), the contents on a debit note include:
- Supplier’s name, GSTIN, address
- Nature of the document
- Serial number which is consecutive and does not exceed 16 digits, in single or multiple series with numerals, or letters, or special characters hyphen (-) and forward slash (/) in any combination, unique to the financial year
- Issue date of document
- Registered recipient’s name, GSTIN/UIN, and address
- Unregistered recipient’s name, address, delivery address, state, and state code
- Date and serial number of corresponding tax invoice(s) or bill(s) of supply
- Taxable supply’s value, tax rate, credited or debited tax amount to the recipient
- Physical or digital signature of supplier or his/her authorized representative.
Before the GST Amendment Act 2018, a debit note had to be issued for each invoice. However, after the amendment, a consolidated debit note can be issued against multiple invoices which are used during a specific financial year. This will not require linking the debit note to individual invoices separately.
Disclosure of Debit Note in GST Return Forms
Debit note is to be disclosed and amended in GSTR forms as follows:
- GSTR-1: Debit note will be disclosed in Table 9B which will entail information related to the original debit note issued.
This information can be amended in the subsequent period and such amendments will have to be reported in Table 9C.
- GSTR 3B: Debit note will be disclosed in Table 3.1(a) which will entail information related to outward taxable supplies (except zero-rated, nil-rated, and exempted supplies) by adding the same to the outward supplies.