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In this article, we will discuss the concept of revised invoice, debit note, credit note and how to revise already issued an invoice.

Topics:

What is Debit Note and Credit Note?

When goods supplied are returned or when there is a revision in the invoice value due to goods (or services) not being up to the mark or extra goods being issued a Debit Note or Credit Note is issued by the supplier and receiver of goods and services.

A debit note or a Credit Note can be issued in 2 situations –

  1. When the amount payable by buyer to seller decreases –There can be a change in the value of goods after the goods are delivered and invoice is issued by the seller. This can be due to a return of goods or due to the bad quality of the goods delivered, etc.In this case, the value of goods decreases due to which a Debit Note is issued by the purchaser to the seller. The Debit Note provides details of the amount of money debited from the sellers’ account and also states the reason for the same.The reason behind this – In the purchaser’s books of account the seller will have a credit balance. When a debit note is issued the credit balance of the Sellers account decreases, thus reducing the seller’s balance. It means that that lesser amount is required to be paid by the buyer to the seller to settle his liability. Thus debit note reduces the liability for the buyer.The seller issues a Credit Note as a response or acknowledgment to the Debit Note
  2. When the amount payable by buyer to seller increases-When the value of invoice increases due to extra goods being delivered or the goods already delivered have been charged at an incorrect value a Debit Note is required to be issued.The Debit Note, in this case, is issued by the seller to the buyer. And the buyer as an acknowledgment to the receipt of Debit Note issues a Credit Note.The reason behind this – In the seller’s books of account the buyer will have a debit balance. When a debit note is issued the debit balance of the buyer’s account increases. It means that more amount is required to be paid by the buyer to the seller to settle his liability. Thus, credit note increases the liability for the buyer.debit note, credit note

Debit Note under GST

Cases when Debit note is to be issued by supplier:

  Cases Where Debit note has to be issued by the Supplier
A. Original tax invoice has been issued and taxable value in the invoice is less than actual taxable value.
B.

Original tax invoice has been issued and tax charged in the invoice is less than actual tax to be paid.

Note Debit note will include a supplementary invoice.

Credit Note under GST

Cases when Credit note is to be issued by supplier:

  Cases Where Credit note has to be issued by the Supplier
A Original tax invoice has been issued and taxable value in the invoice exceeds actual taxable value.
B  Original tax invoice has been issued and tax charged in the invoice exceeds actual tax to be paid.
C  Recipient returns the goods to the supplier
D   Services are found to be deficient
 Note: Credit note will include a supplementary invoice

Details to be covered in Debit Note and Credit Note

The debit note/ credit note shall contain the following particulars:

invoices are to be issued when there is a deficiency in original bill issued.

  1. name, address, and GSTIN of the supplier,
  2. nature of the document,
  3. a consecutive serial number containing only alphabets and/or numerals, unique for a financial year,
  4. date of issue of the document,
  5. name, address and GSTIN/ Unique ID Number, if registered, of the recipient,
  6. name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered,
  7. serial number and date of the corresponding tax invoice or, as the case may be, bill of supply,
  8. the taxable value of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient, and
  9. signature or digital signature of the supplier or his authorized representative.

Debit Note or Credit Note can be issued anytime i.e there is no time limit for issuing the Debit Note. Also, Debit Notes and Credit Notes issue have to be declared in the GST returns filed in the following month for the month in which document is issued

The details have to be declared on earlier of the following dates:

  • September following the end of the year in which such supply was made,
  • the date of filing of the relevant annual return

Note: The tax liability will be adjusted but no reduction in output tax liability of the supplier will be permitted if the incidence of tax and interest on such supply has been passed on to any other person.

How to generate a Debit or Credit Note?

You can create a Debit Note or a Credit Note in no time using ClearTax GST. Once you create a Credit or Debit Note the amount gets adjusted against the original invoice.

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What is a Revised Invoice under GST?

Under GST, all the taxable dealers will have to apply for provisional registration and carry out all the formalities post which they will get the permanent registration certificate.

For all the invoices issued between the period –

  1. Date of implementation of GST
  2. Date of issue of Registration certificate

the dealers will have to issue a revised invoice against the invoice already issued between the said period. The revised invoice will have to be issued within one month from the date of issue of the registration certificate.

What are supplementary invoices and their uses?

Supplementary tax invoice is a type of invoice that is issued by a taxable person in case where any deficiency is found in a tax invoice already issued by a taxable person. It can be in form of a debit note or a credit note.

What is the difference between Revised invoice and Supplementary invoice?

The difference between a revised invoice and a supplementary invoice can be enumerated as follows:

Particulars

Revised Invoice

Supplementary Invoice

Meaning Revised invoice may be issued by a taxable person in relation to any invoice already issued by him. Supplementary tax invoice has to be issued by a taxable person in case where any deficiency is found in a tax invoice already issued by a taxable person.
Period covered The period starting from the effective date of registration till the date of issuance of certificate of registration. Not based on period but invoice specific
Issued to whom Only to registered person. To registered taxable persons as well as unregistered persons.

For formats of other tax invoices issued under GST click on the below links:

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