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From small trading businesses to large corporations when operating their concerns. These two different sizes of organizations regularly may face a problem that is common to both of them. And that problem is making errors in their invoices. To rectify this mistake, a document both these business verticals use is Credit Note and Debit Note.

With the implementation of GST, like tax invoices and other documents, the credit and debit notes also have GST rules. Accordingly, the companies have to show them in the monthly GST Returns.

So let’s understand more about Credit Notes and Debit Notes.

What is a Credit Note?

Credit Note
Credit Note

It is a document that the seller issues to the buyer due to an error in the invoice. Also, in the case of return of goods by the buyer to the seller results in Credit Invoice generation.

Further, if we talk in terms of GST, the supplier only, if registered issues, a Credit Note. Additionally, the reason to issue the document may be to decrease the GST rate or Taxable Value. And that is the reason to issue a Credit Note.

What is a Debit Note?

Debit Note
Debit Note

It is a document that the buyer issues to the seller when the return of goods by the customer takes place.

But the concept in terms of GST is a little different. The registered supplier only issues the Debit Note to the customer. Further, the reason to issue the note is to increase the Taxable Value or GST Rate.

Both the Credit Note and Debit Note are also called Supplementary Invoice in GST.

Credit Notes Format under GST.

According to the GST Rules and Regulations, these are all details that need to be present in a Credit Note-

  • Name and Nature of the document,
  • Name, Address, and GSTIN of the supplier,
  • A consecutive serial number made of alphabets, or numerals, or special character, in any combination that is unique for a financial year. And the serial number should not exceed 16 characters,
  • Date of issue of the document,
  • Serial number and date of the corresponding tax invoice or bill of supply for which Credit Note is getting issued,
  • Name, Address, and GSTN or Unique Identity Number, of the buyer, is registered under GST, OR
  • Name and Address of the recipient. And the Address of delivery, along with the name of State and its code, if such recipient is un-registered
  • Value of taxable supply of goods or services, rate of tax, and the amount of the tax credited to the recipient,
  • And the signature or digital signature of the supplier. 

Debit Notes Format under GST.

According to the GST Rules and Regulations, these are all details that need to be present in a Debit Note-

  • Name and Nature of the document,
  • Name, Address, and GSTIN of the supplier,
  • A consecutive serial number made of alphabets, or numerals, or special character, in any combination that is unique for a financial year. And the serial number should not exceed 16 characters,
  • Date of issue of the document,
  • Serial number and date of the corresponding tax invoice or bill of supply for which Debit Note is getting issued,
  • Name, Address, and GSTN or Unique Identity Number, of the buyer, is registered under GST, OR
  • Name and Address of the recipient. And the Address of delivery, along with the name of State and its code, if such recipient is un-registered
  • Value of taxable supply of goods or services, rate of tax, and the amount of the tax debited to the recipient,
  • And the signature or digital signature of the supplier. 

How to Report Credit Note and Debit Note under GST?

According to the existing GST Return system, Credit Note and Debit Note both reporting happens in GSTR-1. The supplier only has to show the details of both Credit Notes, Debit Notes in its GSTR-1.

GST - Credit Note and Debit Note

The reporting of credit notes and debit notes for unregistered buyers happens in Table 9B – Credit/Debit Notes (Unregistered). And the reporting of credit notes and debit notes for registered buyers happens in Table ‘9B – Credit/debit notes (Registered).

Read More about – The Ins and Outs Of GST Filing.

Conclusion

So this is the way how the businesses use these supplementary invoices and report them in GST. The Governments allowing the use of these notes to provide relief to taxpayers in case of any error. But if SMEs and large corporations are not using a GST software tool for their invoicing needs. Then they are increasing more burden on themselves as they have to prepare invoices manually. Further, have to enter all these data in GST Returns also manually. Additionally, this situation may cause more mistakes to happen in the future. So to avoid all these things, the companies should use a software solution to ease out this process. And for Indian SMEs and Manufacturing concerns, TranZact is a suitable tool to help them out in these specific needs.

TranZact is a zero-effort digital transformation tool and platform for SMEs to digitize business processes right, from customer inquiry to dispatch. It helps businesses with their invoicing needs like preparing Tax invoices, Credit and Debit Notes, GST E-Invoices, etc., following all the GST guidelines. Additionally, it helps businesses in generating various GST Reports that help them in their return filing needs.

Read More about – What is GST Invoice & GST E-Invoicing-5 Problems SMEs face?

The TranZact team provides their digitizing tool on a Freemium policy. Because we want our customers to take a step forward in digitizing their businesses without having to think over silly amounts of money.

Further, the organizations must choose TranZact or any other software only when it meets all their requirements. They should check whether it is suitable for their business size and nature. And if the software satisfies all these conditions. Then only should implement it in their organization.

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