Post-sale adjustments · GST

Debit note & credit note format — when to issue which, and how.

Both correct an invoice after it's raised — one increases the tax, the other reduces it. Here's when each applies, the fields GST requires, and a worked example of each.

Reviewed July 2026
6 min read
CA Anil Agarwal & the TatvaBooks team

Why these exist

A tax invoice, once raised, is a fixed legal document — you don't edit it after the fact. But real trade needs corrections: goods get returned, prices get revised, quantities get under- or over-billed. GST handles this with two documents that reference the original invoice and adjust the tax rather than replacing the bill.

A credit note reduces what was charged. A debit note increases it. Both are governed by Section 34 of the CGST Act and Rule 53 of the CGST Rules.

When each is issued

Document	Issued when	GST effect
Credit note	Goods returned, price reduced after the invoice, or the invoice overcharged the buyer.	Reduces the seller's GST liability and the buyer's ITC for that supply.
Debit note	Price increased after the invoice, or the original invoice undercharged (short-billed).	Increases the seller's GST liability and the buyer's eligible ITC.

Common real-world triggers on each side:

Credit note — sales return, damaged goods accepted back, a discount agreed after billing, or the original invoice simply overcharged the buyer.
Debit note — a rate revision agreed after the invoice, freight or other charges added later, or the original invoice under-billed the quantity or rate (short billing).

Mandatory fields (Rule 53, CGST Rules)

Field	Why it matters
Name of the document ("Credit Note" / "Debit Note")	Must be clearly titled — it cannot double as a fresh invoice.
Supplier name, address, GSTIN	Same registered person who raised the original invoice.
Serial number, unique for the financial year	Sequential, per Rule 53 of the CGST Rules — same discipline as invoice numbering.
Date of issue	Determines which GST return period the adjustment falls into.
Original invoice number and date	Mandatory — a credit/debit note with no invoice reference is not valid for GST adjustment.
Taxable value and tax amount adjusted	The exact ₹ and GST amount being added or reduced — not just a lump sum.
Reason for issue	Return, price revision, short/excess billing — keeps the audit trail clear.
Signature of the supplier or authorised representative	Same requirement as a tax invoice under Rule 53.

The one field that trips people up most: the original invoice reference. A credit or debit note issued without stating the invoice it corrects is not a valid GST document — it can't be reported against that supply in your GSTR-1.

Worked example — credit note

A buyer returns part of a fabric order due to a colour mismatch. The seller issues a credit note against the original invoice.

Credit Note

CN No. CN-2026-0028 · Date: 02-07-2026

Against Invoice: INV-2026-0287

Dated: 24-06-2026

Supplier

Sahyadri Textiles Pvt Ltd

GSTIN: 27AABCS5678G1Z2

Buyer

Anmol Garments Pvt Ltd

GSTIN: 27AAECA1234F1Z5

Description	HSN	Qty	Rate (₹)	Amount (₹)
Cotton Fabric — Grey, 60" width	5208	50 Mtr	220.00	11,000.00
Taxable value				11,000.00
CGST 2.5% + SGST 2.5%				550.00
Total credited				11,550.00

Reason

Sales return — colour mismatch, goods received back on 01-07-2026.

Worked example — debit note

A supplier revises the rate on steel rods upward after the original invoice, per an agreed price escalation clause.

Debit Note

DN No. DN-2026-0014 · Date: 02-07-2026

Against Invoice: INV-2026-0311

Dated: 15-06-2026

Description	HSN	Qty	Rate diff (₹)	Amount (₹)
Price revision — Steel Rods 12mm (Inv. no. INV-2026-0311)	7214	2,000 Kg	3.50	7,000.00
Taxable value (additional)				7,000.00
IGST 18%				1,260.00
Total debited				8,260.00

Reason

Price escalation clause invoked — steel rate increase per agreement dated 01-06-2026.

How GST treats the adjustment

Both documents flow into GSTR-1 for the period in which they're issued — not the period of the original invoice. A credit note reduces the seller's output tax for that period and correspondingly reduces the ITC the buyer can carry; a debit note increases both. Reporting is against the original invoice reference, which is why that field is non-negotiable. On the buyer's side, a credit note received should reduce ITC claimed via GSTR-2B reconciliation — miss it, and you risk claiming ITC you're no longer entitled to.

Raising notes correctly in TatvaBooks

The single biggest source of GST notice risk on credit/debit notes is a missing or wrong invoice reference. In TatvaBooks, you don't type a credit or debit note from scratch — you open the original invoice and adjust it, so the reference, HSN codes and tax rate are always correct. It flows straight into your GSTR-1 workings and your GSTR-2B reconciliation. Create this free in TatvaBooks — see the full GST billing workflow or the invoice format guide it builds on.

Frequently asked questions

What is a credit note and when is it issued?

A credit note is issued by the seller when the value on a tax invoice needs to come down — the buyer returned goods, was overcharged, or received a post-sale discount. It reduces the seller's GST output liability and correspondingly reduces the ITC the buyer can claim, so the return isn't double-counted anywhere in the chain.

What is a debit note and when is it issued?

A debit note is issued by the seller when the value on a tax invoice needs to go up — a price revision after billing, or the original invoice under-charged the buyer (short quantity billed, wrong rate applied). It increases the seller's GST output liability, and the buyer becomes eligible for additional ITC on the increased amount.

Can a buyer issue a debit note instead of the seller?

Under GST, only the registered supplier (seller) can issue a credit or debit note that has tax effect and needs to be reported in GSTR-1. A buyer can raise their own internal debit note as a purchase-side accounting entry, but it has no GST standing on its own — it's the seller's document that adjusts the tax.

Is a reference to the original invoice mandatory on a credit or debit note?

Yes. Section 34 of the CGST Act requires the credit or debit note to be issued 'in relation to' a specific tax invoice, and Rule 53 requires the original invoice number and date to be stated on the note. Without that reference, it isn't a valid GST document and can't be used to adjust the return.

Is there a deadline for issuing a credit note under GST?

Yes — for a credit note to reduce output tax liability, it must be declared by the earlier of 30 November following the end of the financial year, or the date of filing the annual return for that year. There's no equivalent deadline for debit notes, since they only ever increase tax payable.

Can TatvaBooks generate GST-correct credit and debit notes?

Yes. In TatvaBooks a credit or debit note is always raised against the original invoice — you pick the invoice, adjust the quantity or rate, and the GST reverses (or adds) exactly the way the return expects. Numbering is sequential and it flows straight into your GSTR-1 workings. Unlimited notes on Solo (₹0); inventory-linked adjustments on Business (₹599/month).

Keep going.

Related formats

On the product

Free on Solo · no card · India-hosted

Raise GST-correct credit and debit notes against the original invoice.

No re-typing, no reference mismatches — reversals and revisions flow straight into your GSTR-1 workings.

Request beta access See GST billing