Credit Note and Debit Note Under GST India — How to Issue, Format & Rules 2026
If you over-charged a client, need to cancel an invoice, or a customer returned goods — you issue a GST credit note. If you under-charged, you issue a debit note. Here is a complete guide to both documents, their formats, time limits, and how they appear in GSTR-1.
Mistakes happen in business — a wrong quantity on an invoice, a returned product, a price revision, or a discount agreed after billing. Under GST, you cannot simply cancel or edit a tax invoice that has already been issued. Instead, you raise a credit note (to reduce the amount) or a debit note (to increase the amount). Getting this right is critical because both documents affect your GSTR-1 and the buyer's ITC claims.
What Is a GST Credit Note?
A credit note under GST is issued by the supplier (seller) to the buyer when the taxable value or GST on an earlier invoice needs to be reduced. Situations that require a credit note include:
- Goods returned by the buyer (sales returns)
- Invoice value was higher than the agreed price
- Defective or damaged goods sent — buyer is entitled to a price reduction
- Post-sale discount or scheme agreed after the invoice was raised
- Services partly delivered or service cancelled after invoicing
What Is a GST Debit Note?
A debit note is the opposite — it is issued by the supplier to the buyer when the taxable value or GST needs to be increased after the original invoice was issued. Common reasons include:
- Invoice raised at a lower price than what was agreed — price revision upward
- Short quantity billed — additional goods delivered without a fresh invoice
- Additional charges (packaging, freight) not included in the original invoice
- GST rate correction — original invoice applied a lower rate than required
| Credit Note | Debit Note | |
|---|---|---|
| Issued by | Supplier | Supplier |
| Effect on invoice value | Reduces it | Increases it |
| Effect on GST liability | Reduces supplier's output tax | Increases supplier's output tax |
| Effect on buyer's ITC | Buyer must reverse ITC taken | Buyer can take additional ITC |
| Reported in | GSTR-1 (B2B / B2C) — Table 9B | GSTR-1 (B2B / B2C) — Table 9B |
Time Limit for Issuing a Credit Note or Debit Note
Under Section 34 of the CGST Act, a credit note for a supply must be issued by the earlier of:
- 30th September of the year following the financial year in which the original supply was made, OR
- The date of filing the annual return (GSTR-9) for that year — whichever is earlier
Example
If you raised an invoice in July 2025 (FY 2025–26), the credit note must be issued before 30 September 2026 or before you file your GSTR-9 for FY 2025–26 — whichever comes first. There is no time limit for debit notes.
Mandatory Fields in a GST Credit Note / Debit Note
- 1The words 'Credit Note' or 'Debit Note' prominently at the top
- 2Your GSTIN, name, address
- 3Unique sequential credit/debit note number (up to 16 characters)
- 4Date of issue
- 5Original invoice number and date being amended
- 6Buyer's GSTIN, name, and address
- 7HSN/SAC code for the goods or services
- 8Taxable value being revised (positive or negative)
- 9GST amount (CGST + SGST or IGST) being revised
- 10Reason for the credit or debit note
How to Report Credit Notes in GSTR-1
Credit notes and debit notes are reported in Table 9B of GSTR-1 under the 'Amendments to B2B invoices' or 'Credit/Debit Notes' section. Each note must reference the original invoice number and date. For B2C supplies, they go into Table 9A (large value) or Table 9B based on the supply value and state.
Manage Your GST Invoices with Ozydo
Create, share, and track invoices. GSTR-1 export included in Pro plan.
Start Free →Frequently Asked Questions
Can I cancel a GST invoice instead of issuing a credit note?
Once a tax invoice is issued and reported in GSTR-1, you cannot delete it. You must issue a credit note for the full invoice value to effectively cancel it. The original invoice and the credit note both appear in your GSTR-1 — they offset each other.
Does a credit note affect the buyer's ITC?
Yes. When you issue a credit note, the buyer must reverse the ITC they took on the original invoice — to the extent of the credit note value. The GST department matches credit notes issued by suppliers against ITC reversals by buyers during GSTR-2B reconciliation.
What if I issued an invoice with the wrong GST rate?
Issue a credit note against the original invoice and raise a fresh invoice with the correct GST rate. Both documents will appear in your GSTR-1. Do not attempt to correct the original invoice — it cannot be edited after being issued.
Is a 'revised invoice' the same as a credit note?
No. A revised invoice can only be issued during the period between registration and the first GST return. After your first return is filed, you cannot raise revised invoices — you must use credit notes or debit notes for all subsequent corrections.
📚 Related Guides
Written by the Ozydo Team
Ozydo is India's simplest free GST invoice app for small businesses and freelancers. We write practical guides on invoicing, GST, and business finance to help you get paid faster.
Read more articles →