# Debit note

> Under GST, a debit note is the document a seller issues to increase the value or the tax of an invoice already issued, for example when the price was undercharged. In everyday trade the same name is also used for the note a buyer sends a supplier when returning goods.

In EaseDesk: In EaseDesk a debit note in Purchases records goods returned to a vendor or a claim against a purchase bill. It reduces what you owe the vendor, takes the stock out and reverses the input tax credit on that bill.

## Why it matters to your business

The word is used in two ways, and mixing them up causes mismatches. If your supplier undercharged
you and sends a debit note, you owe more and can claim more credit. If you return goods and send
your own debit note, you owe less and must reverse credit. Recording each the right way keeps your
vendor's ledger, your stock and your input tax credit correct.

## How it works

As of October 2026:

- **The seller's debit note (Section 34).** Issued when the taxable value or tax on a
  [tax invoice](/glossary/tax-invoice) was too low. It refers to the original invoice, is reported
  in the seller's [GSTR-1](/glossary/gstr-1) and adds to the tax payable.
- **Credit for the buyer.** The buyer claims [input tax credit](/glossary/itc) on it. The deadline
  is 30 November after the financial year in which the debit note was issued.
- **The buyer's debit note for a return.** A commercial document raised with the returned goods.
  The supplier issues a [credit note](/glossary/credit-note), and the buyer reverses the credit
  taken on those goods.

## An example

A Coimbatore mill invoices yarn at ₹200 a kilo for 1,000 kilos, but the agreed price was ₹210. The
mill issues a debit note for ₹10,000 plus 5% GST (₹500). The buyer pays the extra ₹10,500 and
claims ₹500 more credit.

In the other direction, a buyer who finds 50 kilos damaged sends them back with a debit note for
₹10,500 plus GST. The mill replies with a credit note for the same amount.

## Common mistakes

- Treating a supplier's debit note as a return and reducing the vendor's balance.
- Returning goods without any document, so stock and the vendor's ledger no longer agree.
- Not reversing input tax credit on goods returned.
- Missing the credit on a supplier's debit note because the original invoice is from an earlier year.

## Questions

### What is the difference between a debit note and a credit note?

A credit note reduces the amount of an earlier invoice. A debit note increases it. Under GST both are issued by the seller.

### Who issues a debit note under GST?

The seller, when the taxable value or the tax charged on the original invoice was less than it should have been. The seller reports it in GSTR-1 and pays the extra tax.

### Why does a buyer raise a debit note for a purchase return?

It is a long-standing trade practice. The buyer's debit note tells the supplier that goods are being sent back and the account should be reduced. For GST, the supplier answers it with a credit note.

### Can I claim input tax credit on a debit note?

Yes, on a debit note your supplier issues to you. The time limit runs from the financial year in which the debit note is issued, not the year of the original invoice.

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Source: https://www.easedesk.com/glossary/debit-note · Updated 2026-10-02 · EaseDesk