Debit Note · 5 min read
What Is a Debit Note and How Does It Differ from a Credit Note?
A debit note increases what is owed — either the buyer sends it to the seller to request a reduction in payable, or the seller sends it to increase the invoice amount. Here is how it works.
The Core Definition
A debit note is a document that records an increase in a financial obligation. The name comes from double-entry bookkeeping: when you issue a debit note to someone, you are debiting their account — recording that they owe you more money.
Confusingly, a debit note can be issued by either the buyer or the seller, and the direction of the obligation is opposite in each case. The context determines which party is sending it and why.
Two Perspectives on a Debit Note
Buyer-Issued Debit Note
A buyer issues a debit note to the seller when the buyer is returning goods or has received less than invoiced. By issuing the debit note, the buyer is formally notifying the seller: "We are debiting your account with us by this amount — you owe us a credit."
Example: A retailer receives 100 units of goods but 20 are damaged. The retailer issues a debit note to the supplier for the value of the 20 units. The supplier then issues a corresponding credit note to acknowledge the reduction.
Seller-Issued Debit Note (GST Context)
Under Section 34 of the CGST Act, the debit note is specifically a document issued by the supplier (seller) when the taxable value or tax charged in the original invoice is less than what it should have been. The seller issues a debit note to increase the buyer's liability.
Example: A supplier invoiced ₹50,000 for goods but the agreed price was ₹55,000 (a data entry error). The supplier issues a debit note for ₹5,000 to correct the shortfall. The buyer's payable increases; the supplier's GST liability also increases by the GST on ₹5,000.
Debit Note vs Credit Note: Side-by-Side
| Attribute | Debit Note | Credit Note |
|---|---|---|
| Effect on buyer's balance | Increases amount owed | Decreases amount owed |
| Issued by (GST context) | Supplier (seller) | Supplier (seller) |
| Common trigger | Invoice undercharged, price increase | Goods returned, overcharge, discount |
| GST impact on supplier | Increases output tax liability | Decreases output tax liability |
| GST impact on buyer | Buyer can claim additional ITC | Buyer must reverse ITC |
| Time limit | No statutory deadline under GST | 30 September of next FY (Section 34) |
Required Fields Under Rule 53
A GST-compliant debit note must include:
- The words "Debit Note" prominently displayed
- Name, address, and GSTIN of the supplier
- Name, address, and GSTIN of the recipient
- Serial number and date of the debit note
- Reference to the original invoice number and date
- Taxable value of the upward adjustment
- Rate and amount of GST on the adjustment (CGST + SGST or IGST)
- Reason for the debit note
- Signature of the supplier or authorised representative
GST Reporting
Debit notes issued during a tax period must be reported in Table 9B of GSTR-1, alongside credit notes. When reported, the additional tax flows into the buyer's GSTR-2B as additional eligible ITC — the buyer can claim Input Tax Credit on the debit note amount, subject to other conditions.
Unlike credit notes, there is no statutory deadline for issuing a debit note under GST — you can issue one at any time after the original invoice. However, the tax period in which it is reported determines when the additional liability is payable.
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- Central Goods and Services Tax Act, 2017 — Section 34 (Credit and Debit Notes).
- Central Goods and Services Tax Rules, 2017 — Rule 53 (Debit Note Format).
- CBIC FAQ on GST — Credit and Debit Notes, 2022.
- Institute of Chartered Accountants of India — Accounting Standards on adjustments and documentation.