A Debit Note is a document which a seller issued when the amount of payment to be received by the seller from the buyer increases. Under GST, a seller issues debit note in the following case:
- Value of the invoice increases
- A seller might have made a mistake while issuing an invoice to the buyer. If there is an error while entering the price, quantity, or tax amount in the original invoice, the seller can issue a debit note to make the correction. Thus, when the value of invoice increases after correction of the error, the seller issues a debit note.
Sales Invoice No.1 was issued for Rs.1000 (10 units * Rs.100). If the revised price is Rs.110, a debit note of Rs.100 (10 units * Rs.10) would be issued. Thus, the buyer is liable to pay Rs.1100 (10 units * Rs.110) to the seller.
The seller and buyer should declare the details of a Debit Note in the GST Return for the month in which the seller issues a Debit Note.
Sample Debit Note
The supplier can issue a Debit Note if the value of goods in the Invoice is less than the actual value or the rate of GST or Tax amount charged is at a lower rate than what is applicable.
Suppose Rakesh is a wholesale supplier of furniture. He sold 15 chairs to Rohan. The price for each chair is INR 150. But soon after delivery, Rohan realizes that 3 chairs are damaged. In this case, Rakesh can issue a Debit Note of INR 450 to Rohan.
It is not possible to issue either a Debit or a Credit Note without GST including in it. Mainly because, for the reversal of Tax, GST must be taken in Credit/ Debit notes.