GST – How to Revise a GST Invoice, Debit Note and Credit Note?

What is a credit note, debit note, and what is a revised invoice under GST? And how do I create a revised invoice under GST?

GST implementation will take some time, but we should know about the process of creating debit notes, credit notes, and how to revise an invoice under GST. In this article, we will discuss the adjustment entry under the GST Act.

In the definition of outward supplies, invoices, credit notes and debit notes have been included and same is applied to inward supplies.

Under the GST Act, every taxpayer will have to file monthly tax returns and while submitting the tax returns, they need to file details of inward and outward supplies like sales, purchase, credit notes, and debit notes, so that you can claim input tax credit and determine your tax liability for a specific period.

What is a revised invoice under GST?

GST is expected to roll out on 1st July 2017. All existing taxable dealers will have to apply for provisional registration through the migration process with the existing state /central government website. On the rollout date of the GST or after, all such taxpayers will have to complete the necessary formalities and after review by GST, all such taxpayers will get permanent registration certificate under GST.

All such taxpayers will have to revise their invoices from the date of implementation of GST to the date of issue of a GST registration certificate. The revised invoice must be issued within 30 days from the date of issue of the registration certificate under the GST Act. The revision in the invoice with the GST number and HSN code / SAC will ensure proper credit of input tax and correct tax liability can be determined only with the proper migration of tax credit from the previous tax laws.

What are supplementary invoices and when do I this?

A supplementary invoice is issued by a taxable person to settle the difference in an invoice. There may be a case of excess or shortfall in the invoice value. To ensure that the actual invoice value matches with the earlier issued invoice, the supplementary invoices is to be issued, since it will further increase or decrease the value of the invoices. As per GST law, the supplementary invoices should be issued within the time limit as prescribed by the GST Act. Supplementary Invoices can be issued in form of debit or credit note.

What is the difference between a supplementary invoice and revised invoice?

Particulars Supplementary Invoice Revised Invoice
Meaning Supplementary invoice is to be issued to settle the excess or shortfall in earlier issued invoices than the actual invoice value of supply of goods or services. Merely this is an ongoing transaction in the form of a debit credit. The revised invoice is just a simple process to revised already issued invoice by a taxable person during implementation phase of GST.
Period covered It covers invoices not in a period. Though there is a time limit to issue the supplementary invoice. From the rollout date of GST to the date of actual issuance of GST registration certificate.
Issued to Whom It can be issued to both registered and unregistered purchaser. This is merely an accounting entry to settle the difference post issuance of invoices under GST. It is can be issued only by a registered person under GST Act.
Occurrence This is repetitive transaction under GST Act Revised invoice is a non-repetitive transaction and it is only applicable during the implementation phase of GST.

What is a credit note under GST?

A credit note is also called a supplementary invoice under GST and a credit note is to be issued to reduce the value of taxable invoices.

Below we will discuss when you may need to issue credit note as a supplier of goods or services. 

  • Tax difference – the original tax invoice has been issued and the tax charged in the invoice exceeds actual tax to be paid under GST. To settle this difference, a credit note has to be issued.
  • Value difference – the billed value of goods or services is lower than the actual invoice value.
  • Good Return – When there is a return if goods by the purchaser within six months from the date of purchase, then credit can be issued with the reversal of earlier charged output tax. In the case of sales return beyond six months, the sales return will be treated as an outward supply for the purchaser and GST has to be paid on such deemed outward supplies of goods.
  • Deficiency in services – Credit notes can be issued when a service provider is not able to deliver the service and they wish to cancel the service level agreement.

What is a debit note under GST?

A debit note is also called a supplementary invoice under GST, and a debit note is to be issued to increase the value of an invoice under GST.

Circumstances when a supplier can issue a debit note

  • Value difference – Original tax invoice has been issued and taxable value in the invoice is lower than the actual taxable value.
  • Tax difference – Original tax invoice has been issued and the tax charged in the invoice is lower than the actual tax to be paid by the supplier.

What details should be included in a supplementary or debit note or credit note?

  • Details of supplier like name, address, and GSTIN
  • Unique consecutive serial number
  • Date when supplementary invoice has been created
  • Details of recipient: if registered, then GSTIN is mandatory
  • Invoice reference number against a debit or credit note has been issued
  • Tax heads should be debited or credited based on the nature of supplementary invoices
  • Supplementary invoice should be digitally signed by the taxpayers or its authorized representative