Credit notes and debit notes, plainly.

What they are for

A tax invoice, once issued, should not be edited to change its value or tax. When the invoice turns out to have charged too much, because goods came back, a price was overcharged, or what was supplied fell short, the supplier issues a credit note against it. When it charged too little, the supplier issues a debit note. Either one adjusts the original invoice; it does not replace it.

For your registered customer, a credit note reduces the input tax credit they took on the invoice, and a debit note adds to it.

What a note has to carry

A GST credit or debit note carries much of what an invoice does:

• Your business: name, address and GSTIN.
• What it is: a credit note or a debit note.
• A number and date. The number must be unique within the financial year and no longer than 16 characters.
• Your customer: name and address, and their GSTIN if they are registered.
• The invoice it adjusts: the number and date of the original invoice, or invoices.
• The amounts: the taxable value, the rate, and the tax being credited or debited.
• A signature or digital signature of the supplier or an authorised person.

The deadline for credit notes

A credit note that lowers your tax has to be declared in a return no later than 30 November after the end of the financial year in which the supply was made, or the date you file the annual return for that year, if that comes first. After that, the tax on the invoice can no longer be reduced through your returns. Debit notes have no such cut-off for you as the supplier.

Discounts given after the sale

A discount agreed after the invoice lowers the GST only when it was agreed before the supply, is linked to specific invoices, and your customer reverses the input tax credit that goes with it. A discount that does not meet those conditions is a commercial matter between you and the customer: you can give it, but the GST already charged stays as it was. Your CA can tell you which one you have.

Where notes go in your returns

In GSTR-1, notes issued to registered customers are reported one by one against the customer’s GSTIN. Notes against export invoices, and against large inter-state invoices to unregistered buyers, are reported in a section of their own. Notes on other sales to unregistered buyers adjust the summary of those sales.

In GSTR-3B, the tax on a credit note comes off your outward tax for the month the note is issued in, and the tax on a debit note is added to it.

How PlusGST makes them

Open an invoice and choose Credit or Debit Note. The note starts with the invoice’s customer and lines: lower a quantity or remove a line for a partial note, and add the reason, such as a return. Credit notes and debit notes each have their own number series, CN- and DN- unless you change them in your numbering settings.

A note prints in the same template as your invoices, is listed under Credit/Debit Notes, and goes into your GSTR-1 and GSTR-3B files for the month of its date, in the sections described above. Your dashboard’s sales are shown after notes, the same way the return counts them. More on the GST reports page.

A note on this guide

This is general information to help you understand your own documents, not tax advice. Rules and deadlines change, and your situation may have details this guide does not cover. Check anything that matters with your CA.

Next: reverse charge, plainly, what a GST invoice has to carry, or all guides and tools.