When Should a Supplier Issue Debit Note under GST?
We have learnt about Tax Invoice and Bill of Supply under GST, which are to be issued at the time of supply. Once a supply is made and Tax invoice or Bill of Supply has been issued, the supply can be cancelled or modified due to various reasons. In these cases, a credit note or debit note is issued to record the cancellation or modification of the details of a supply. There are certain specified scenarios in which a debit note or credit note should be issued. Note that debit note can also be called as supplementary invoice. In this blog, let us understand the scenarios in which a supplier should issue debit note under GST.
Scenarios when a supplier should issue debit note
A supplier should issue a debit note/supplementary invoice for a supply in the following cases:
a. Increase in taxable value
When a supplier requires to increase the taxable value of a supply, he/she has to issue debit note to the recipient.
For example: Ram Electronics in Karnataka supplies 10 mobile phones @ Rs. 10,000 each to Shyam Electronics in Maharashtra. IGST @ 12% on total value of Rs. 1,00,000, which is Rs. 12,000, is charged. After the supply, it is realized that the price of each mobile phone is Rs. 11,000.
Here, Ram Electronics can issue debit note to Shyam Electronics, for the increase in price of each mobile phone by Rs. 1,000. IGST @ 12% on the debit note value of Rs. 10,000 (10 mobile phones*Rs. 1,000), which is Rs. 1,200, is charged.
b. Increase in GST charged in invoice
When a supplier requires to increase the rate or value of GST charged in an invoice, he/she has to issue debit note to the recipient.
For example: Ram Electronics in Karnataka supplies 10 laptops @ Rs. 10,000 each to Shyam Electronics in Maharashtra. IGST @ 18% on the total value of Rs. 1,00,000, which is Rs. 18,000, is applicable on the supply. However, due to a mistake in calculation, Mr. Ram charges IGST @ 12% in the invoice, of Rs. 12,000.
Here, Ram Electronics can issue debit note to Shyam Electronics for the increase in GST charged in the invoice by Rs. 6,000.
Debit note format
A debit note format sample is shown below.
Furnishing details of debit note
Details of debit notes issued should be furnished in Form GSTR-1 for the month in which the debit note is issued:
These details will be made available to the recipient in Form GSTR-2A as shown below:
The recipient has to accept the details and submit in Form GSTR-2.
Note that debit note can be raised by a recipient also, when the goods received are returned, damaged in transit, taxable value shown in the invoice is more than the actual or tax charged is more than the actual. However, under GST, debit note or credit note furnished by a supplier only will be considered for revision in the values of an invoice. The same has to be accepted by the recipient for corresponding impact on input tax credit on the supply.
In this blog, we have learnt about the scenarios in which a supplier should issue debit note under GST. In the next blog, we’ll learn about the scenarios in which a supplier should issue credit note under GST.
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