Credit note vs debit note under GST: when do you issue each?
Updated · Sources linked below
Side by side
| Credit note | Debit note | |
|---|---|---|
| Effect on the invoice | Reduces value and tax | Increases value and tax |
| Typical reasons | Goods returned, discount after sale, overcharging, deficient supply | Undercharging, extra quantity, freight added later |
| Issued by | The supplier | The supplier |
| Time limit | 30 November after the year ends, or the annual return, if earlier | No time limit |
| Your output tax | Goes down | Goes up |
What both must show
- Your name, address and GSTIN
- The nature of the document (credit note or debit note)
- Its own serial number, up to 16 characters, and date
- The buyer's name, address and GSTIN
- The original invoice it adjusts
- Taxable value, tax rate and tax amount being credited or debited
- Signature
The credit note time limit
A credit note for a supply can be declared only up to 30 November following the end of that financial year, or the date you file the annual return, whichever is earlier. After that, you can't reduce your tax for that supply.
Example: for an invoice dated 10 January 2026 (FY 2025-26), the credit note must be declared by 30 November 2026.
Questions people also ask
Can the buyer issue a debit note under GST?
Buyers often send a "debit note" for returns, but under GST the tax adjustment is the supplier's credit note.
Can one credit note cover many invoices?
Yes. A single credit note may relate to one or more tax invoices; list them in the note.
Is a debit note the same as a new invoice?
No. It increases an existing invoice. For a separate new supply, issue a new tax invoice.
Where do credit notes go in GST returns?
In GSTR-1 for the month you issue them, which reduces your output tax for that period.
Official sources
This guide explains the rules in plain words; it isn't legal or tax advice. Rules change, so check the sources or ask a Chartered Accountant for your situation.
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