All about Credit and Debit Notes In GST

The most controversial topic in GST in India Is about the GST Credit and Debit notes. Who shall issue credit or debit note and when shall it be issued and time limit for issuing such documents. Before answering all these we have to understand the meaning of Credit and Debit notes.The thumb rule is GST Credit and Debit Notes can only be issued by Supplier In GST.

What is a Credit Note ?

Credit Note means a document issued by a Registered Person under sub section 1 of Section 34 of GST Act.

What is a Debit Note ?

Credit Note means a document issued by a Registered Person under sub section 3 of Section 34 of GST Act.

Section 34(1) says ,

Where one or more tax invoices 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 exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes containing such particulars as may be prescribed.

Section 34(2) says ,

Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return in Form GSTR-1 in GST Portal for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return in Form GSTR-9, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed. But if the incidence of tax has been passed on to any other person , then output liability cannot be adjusted by issuing credit notes in such cases.

In simple terms, Credit Notes can only be issued by a Supplier of goods or services or both and not by the recipient of supply in GST and should be uploaded in the GST Return to adjust the tax liability in respect of such supply.

Section 34(3) says ,

Where one or more tax invoices 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 one or more debit notes containing such particulars as may be prescribed.

Section 34(4) says ,

Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return in Form GSTR-1 for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed

In simple terms, Debit Notes can only be issued by a Supplier of goods or services or both and not by the recipient of supply in GST and should be uploaded in the GST Return to adjust the tax liability in respect of such supply .

Debit Notes also includes supplementary invoices issued in GST. GST credit and Debit Notes must be uploaded in GSTR1 for tax adjustments .