Differences between a debit note and credit note

By Annapoorna


Updated on: Nov 8th, 2021


3 min read

Businesses use debit notes and credit notes as official documents for accounting sale return and purchase return transactions. These notes inform the buyer how much credit they have or how much further they owe to the vendor.

Debit note vs credit note becomes important to understand where business frequently deals with both scenarios. The understanding of terms could also vary from the perspective of the seller and buyer. But the following comparison is made in common business parlance.

Below is a comparative table of debit notes vs credit notes:

ParticularsDebit noteCredit note
Who issues it?The buyer of goods issues it.The seller of goods issues it.
MeaningThe buyer of goods issues a debit note to the seller to return the goods received due to quality issues or other reasons. A debit note contains the reason for the return of goods.The seller of goods issues a credit note to confirm that the purchase return is accepted.
Can be issuedIt can be issued only in the event of credit purchases from the buyer's perspective.It can be issued only in the event of credit sales.
ImpactIt reduces account receivables in the books of sellers.It reduces account payables in the books of the buyer.
ReflectsA debit note reflects a positive amount.A credit note reflects a negative amount.
FormIt is another form of purchase return.It is another form of sales return.
AccountingIt leads to updating purchase return books.It leads to updating of sales return books.
EntrySupplier Account Dr.
Purchase return Cr.
Sales return account Dr.
Customer Account Cr.
Issued in exchange ofA debit note is issued in exchange for a credit note.A credit note is issued in exchange for a debit note.
Issued by a seller to the buyerThe seller issues debit notes to the buyer if the buyer is undercharged or the seller has sent additional goods.The buyer issues a credit note as an acknowledgement of a debit note received.
InkIt is issued in blue ink.It is issued in red ink.
About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more


Quick Summary

Debit notes and credit notes are used in accounting for sale and purchase return transactions, reflecting account receivables and payables. Buyer issues a debit note while the seller issues a credit note.

Was this summary helpful?

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use


ISO 27001

Data Center


SSL Certified Site

128-bit encryption