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Credit Note and Debit Note Under GST: When to Issue, Format and Time Limit

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Quick answer

Issue a credit note when the value or tax on an invoice you've already issued must come down — goods returned, a price cut after billing, or tax charged too high. Issue a debit note (also called a supplementary invoice) when it must go up. Both fall under section 34 of the CGST Act and must show the details in Rule 53(1A), including the number and date of the original invoice. Declare a credit note in your return no later than 30 November after the end of the financial year of the original supply, or the date you file the annual return, if earlier.

Credit note vs debit note

Credit noteDebit note
EffectReduces the value or tax chargedIncreases the value or tax charged
Typical reasonsGoods returned, price reduced, tax charged too high, services found deficientValue under-billed, price raised after billing, tax charged too low
Issued byThe supplierThe supplier
Supplier's taxGoes downGoes up

What a credit or debit note must contain

Rule 53(1A) of the CGST Rules lists the particulars:

  1. Name, address and GSTIN of the supplier.
  2. The nature of the document — “Credit note” or “Debit note”.
  3. A consecutive serial number of at most 16 characters, unique for the financial year.
  4. Date of issue.
  5. Name, address and GSTIN/UIN of the recipient, if registered.
  6. For an unregistered recipient: name, address and delivery address, with the state name and state code.
  7. Serial number and date of the original tax invoice or bill of supply.
  8. The taxable value, the tax rate, and the tax credited or debited.
  9. Signature or digital signature of the supplier or an authorised representative.

Most businesses run a separate number series, such as CN/26-27/001 for credit notes and DN/26-27/001 for debit notes.

Time limits

Credit note: declare it in your return no later than 30 November following the end of the financial year in which the original supply was made, or the date you file the annual return for that year, whichever is earlier. After that, you can't reduce your tax liability with it.

Debit note: declare it in the return for the month in which you issue it.

If your business is covered by e-invoicing, credit and debit notes to registered buyers need an IRN too.

Credit notes in Invoice Studio

Invoice Studio does not create credit or debit notes yet — issue them from your accounting software or with your CA. You can still create the original GST tax invoice here, and its number and date are what the credit note must refer to.

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Frequently asked questions

A credit note reduces the value or tax of an invoice already issued — for returns, price cuts or excess tax. A debit note increases it — for price increases or tax charged too low. Both are issued by the supplier under section 34 of the CGST Act.

It must be declared in a return no later than 30 November after the end of the financial year of the original supply, or the date of filing the annual return for that year, whichever is earlier.

Yes. Rule 53(1A) requires the serial number and date of the corresponding tax invoice or bill of supply.

Yes. A commercial or financial credit note — for example for a discount that doesn't meet the conditions for reducing the taxable value — can be issued without changing the GST. Neither side adjusts tax or input tax credit for it.

This guide is general information based on the CGST Rules, 2017 and the IGST Act, 2017. It is not tax or legal advice — rates, thresholds and notifications change, so confirm your situation with a chartered accountant or on the official GST portal (gst.gov.in / cbic.gov.in).