CHAPTER XVI

Debit Note in GST

Introduction

A supplier of goods or services or both is mandatorily required to issue a
tax invoice. However, during the course of trade or commerce, after the
invoice has been issued there could be situations like:

• The supplier has erroneously declared a value which is less than the
  actual value of the goods or services or both provided.

• The supplier has erroneously declared a lower tax rate than what is
  applicable for the kind of the goods or services or both supplied.

• The quantity received by the recipient is more than what has been
  declared in the tax invoice. Any other similar reasons.

In order to regularize these kinds of situations the supplier is allowed to
issue what is called as debit note to the recipient. The debit note also
includes supplementary invoice.

Meaning

When a tax invoice has been issued for supply of any goods or services or
both and the taxable value or tax charged in that tax invoice is found to
be less than the taxable value or tax payable in respect of such supply,
the registered person, who has supplied such goods or services or both,
shall issue to the recipient a debit note containing the prescribed
particulars.

Format

There is no prescribed format but debit note issued by a supplier must
contain the following particulars, namely: –

a) name, address and Goods and Services Tax Identification Number of the supplier;

b) nature of the document;

c)a consecutive serial number not exceeding sixteen characters, in one or
multiple series, containing alphabets or
numerals or special characters hyphen or dash and slash symbolised as “-”
and “/” respectively, and any combination thereof, unique for a financial
year;

d) date of issue;

e) name, address and Goods and Services Tax Identification Number or
Unique Identity Number, if registered, of the recipient;

f) name and address of the recipient and the address of
delivery, along with the name of State and its code, if such recipient is
unregistered;

g) serial number and date of the corresponding tax invoice
or, as the case may be, bill of supply;

h) value of taxable supply of goods or services, rate of tax
and the amount of the tax debited to the recipient; and

i)signature or digital signature of the supplier or his authorized representative.

Tax liability

The issuance of a debit note or a supplementary invoice creates additional
tax liability. The treatment of a debit note or a supplementary invoice
would be identical to the treatment of a tax invoice as far as returns and
payment are concerned.

Records

The records of the debit note or a supplementary invoice have to be
retained until the expiry of seventy-two months from the due date of
furnishing of annual return for the year pertaining to such accounts and
records. Where such accounts and documents are maintained manually, it
should be kept at every related place of business mentioned in the
certificate of registration and shall be accessible at every related place
of business where such accounts and documents are maintained digitally.

Conclusion

The debit note or a supplementary invoice is therefore a convenient and
legal method by which the value of the goods or services in the original
tax invoice can be enhanced. The issuance of the debit note will easily
allow the supplier to pay his enhanced tax liability in his returns without
requiring him to undertake any other tedious process.