#whatiscreditnote

Credit note and debit notes are key concepts under the new GST Law, and are central to the processing of GST invoices. Read on to know more about them:

What is credit note and debit note?

Debit note and credit notes are documents issued by the receiver/supplier of goods and services in case of some errors in the already issued invoices.

A debit note is issued by the buyer to the seller to inform them that a debit has been made in the seller’s account. Usually, when the goods are to be returned or found not up to the expectations, buyers can still issue a debit note. It can be raised under 2 circumstances:

·         When the amount of taxable value of goods needs to be amended after an invoice has been issued;

·         When there is a change in the tax after an invoice has been issued.

On the other hand, credit note under GST is issued by the seller to the buyer when a credit has been made in the buyer’s account. Credit note is essentially a document noting the issuer owes money to someone. It can be raised under 3 circumstances:

·         When the recipient returns the goods;

·         When the goods are of inferior quality, and therefore returned back to the supplier;

·         When there is excess tax being charged by the supplier than the actual.

What is the format of debit notes and credit notes?

The debit and credit note in GST needs to have the following requirements:

ü  Name, address, and GSTIN of the supplier;

ü  Nature of the document;

ü  A consecutive serial number that contains only alphabets and/or numerals, unique for a financial year;

ü  Date the document was issued;

ü  Name, address and GSTIN/ Unique ID Number, if registered, of the recipient,

ü  Delivery address, along with State and pin code, if such recipient is unregistered,

ü  serial number and date of the corresponding tax invoice or bill of supply,

ü  the taxable value of goods or services, rate of tax, and the amount of the tax credited/debited to the recipient,