Credit notes is a document that is issued by a registered person under section 34(1) of CGST Act 2017 when supplies are returned or found deficient, or decrease in taxable value or GST charged in invoice. The tax liability of the supplier will reduce, as and when the Credit Note is issued by the registered person.
Supplier who has supplied goods or services or both, shall issue a Credit Note to the recipient in following cases:
Credit note includes the supplementary invoice.
If credit note is issued it should be furnished in GSTR 1 for the month in which it is to be issued. The details will be auto populated in GSTR 2A of the recipient after which it is to be accepted by him or her and submit it in his or her GSTR 2.
A supplier will only be allowed to reduce the tax liability if the recipient accepts the credit note details in his GSTR 2.
If the time expired goods are returned to the manufacturer or supplier, he or she can issue the credit note. The manufacturer can issue credit note with GST before 30th september of the following year under section (34)2 of CGST Act. after uploading this credit note the tax liability of the recipient will be adjusted.
If the goods are returned after 30th september of the following year, the manufacturer or supplier can issue the credit note without GST.
If such returned goods are destroyed by the manufacturer, he or she has to reverse the ITC attributable to the manufacture of such goods under section 17 (5)(h) of IGST Act.
If credit note is not accepted by the recipient and if he or she does not reverse the equivalent input tax credit, the supplier will not be allowed to the reduction of tax liability.
Debit note is a document issued by a supplier under Section 34(3)of CGST Act, 2017, when there is a need of increase in taxable value or increase in GST charged in invoice.
The tax liability of the supplier will increase, as and when the Debit Note is issued by the supplier.
It is to be noted that a debit note can be issued by a recipient also when the goods are returned or damaged in transit. But under GST, only supplier can issue the debit note.
The person who supplies the goods shall issue a debit note in the following cases:
Debit note is to be issued by supplier in following cases:
If debit note is issued it should be furnished in GSTR 1 for the month in which it is to be issued. The details will be auto populated in GSTR 2A of the recipient after which it is to be accepted by him or her and submit it in his or her GSTR 2.
For a corresponding response of the debit note on the tax liability the recipient must accept it in his or her Form GSTR 2.
As per the act the issue of debit or credit note can only be done by the supplier. Both the notes can be issued with GST for increasing or decreasing the liability of GST of the supplier.
If in any case the recipient does not accept the value that is shown in the invoice of the supplier. The supplier do not issue credit note, the recipient has only option to issue debit note without GST otherwise his purchases will be inflated.
The format for debit note or credit note is not prescribed. However, it must include the following particulars that are prescribed:
Debit Note or Credit Note can be issued anytime that is there is no prescribed time limit for issuing them. Both the Debit Notes and Credit Notes that are issued should be declared in the returns of GST filed.
Credit Note and debit note is to be furnished in return for the month for which such note has been issued before :
Whichever is earlier, and the liability of the tax should be adjusted in the manner prescribed.
The major impacts of amendments are as follows:
Any invoice that is issued by a taxable person when any deficiency is found in a tax invoice already issued by him or her is called as supplementary invoice. This document can be in the form of a debit note or a credit note.
Under GST, all the taxable dealers have to apply for provisional registration and carry all the formalities to get permanent registration certificate.
For all the invoices that are issued between the date of issue of registration certificate and the date of implementation of GST, the dealer needs to issue a revised invoice.
This revised invoice have to be issued within one month from the date of issue of the certificate of registration.
The difference between a revised invoice and a supplementary invoice can be enumerated as follows:
When there is revision in any of the taxable amount or tax charged, suppliers issues debit notes or credit notes mentioning all the details regarding changes. Under GST act this should be mentioned in the return of the supplier and accepted by the recipient for making the amendments in the tax liability of the supplier.
Only the registered supplier can issue debit or credit note under GST
There is no prescribed time limit for issuance of debit note or credit note. It can be issued as and when required.
As and when the credit note or debit note is issued it should be filed in the returns of the GST for adjustment of the tax liability.
Yes, the supplier has to declare the details of credit or debit note in his or her return for the month for which they have been issued.