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If you’ve ever run your own business, chances are you’ve had a few questions about debit notes. However, if you have no idea about a debit note, here is a quick explanation. A debit note is a document that that shows the changes made to the invoice amount. Debit notes can be issued at any point during the payment process.
For example: when you send your customer an invoice for Rs. 100, but after a couple of days, you realize that there was an issue on your end, and the invoice amount should be Rs. 110. Instead of sending another invoice for Rs. 10, you can issue them a debit note, along with the best possible explanation as to why they should pay the higher price (instead of drawing more attention to yourself in case it’s your mistake)
A buyer typically issues a debit note to a seller in the following cases:
A seller would need to issue a debit note to a buyer in the following cases:
Whether you take an example of a primary sector or an industry sector, the purpose of a debit note remains the same. Click here to know how it applies to your business.
There is no time limit stipulated for issuing a debit note. However, according to the GST laws, a debit note should be administered at one of the following dates, whichever comes before:
If the debit note is not issued according to these timeframes, then there may be a penalty or
interest levied
While there is no strictly prescribed format of a debit note, the following are some of the mandatory fields: