Credit Note and Debit Note in GST: Format, Rules, Examples

Credit notes reduce tax liability; debit notes increase it. Learn when to issue each under GST with format, time limits, and examples.

When to issue a credit note

When taxable value or tax in an invoice was overstated. When goods are returned by the buyer. When services are deficient or cancelled. The supplier issues the credit note to the buyer.

When to issue a debit note

When taxable value or tax in an invoice was understated. When additional goods or services are supplied. The supplier issues the debit note to the buyer.

Mandatory fields

Supplier and buyer details, GSTINs, reference to the original invoice number and date, reason, taxable value and tax breakup, signature. Same format rules as tax invoice.

Time limits under GST

Credit note: by 30 November of the following financial year, or the date of filing the annual return for that FY — whichever is earlier. Debit notes: no specific time limit, but issue promptly.

Reporting in returns

Credit notes reduce your outward tax liability in GSTR-1. Debit notes increase it. Both must be reconciled against the original invoice — your billing software should link them automatically.

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