Debit Note › Debit note time limit and ITC

Debit note time limit and input tax credit

A debit note raises the tax on a supply, so the rules work differently from credit notes: there is no last date for the supplier to issue one, but the tax is due with the return of the month in which it is issued, and the buyer has a deadline for the input credit.

For the supplier: issue it and pay the tax

• The CGST Act sets no last date for issuing a debit note: tax that is owed must be paid whenever the mistake is found.
• Section 34(4) says the debit note goes into the return for the month in which you issue it. Its tax is added to that month's (or quarter's) outward tax in GSTR-1 and GSTR-3B.
• Issue it as soon as you know. Waiting can mean interest if the tax should have been paid earlier; your accountant can tell you whether interest applies in your case.

For the buyer: input tax credit on a debit note

Since 1 January 2021 the buyer's deadline counts from the year of the debit note, not of the original invoice (section 16(4), as amended). Input tax credit on a debit note must be claimed by the earlier of:

• 30 November following the end of the financial year in which the debit note is dated, or
• the date the buyer files the annual return for that year.

Example: a debit note dated 15 March 2027 (financial year 2026-27). The buyer can claim its credit up to 30 November 2027, even if the original invoice was from 2025-26.

The buyer also needs the note to appear in their GSTR-2B, which happens once the supplier reports it in GSTR-1 (or IFF). A note the supplier never reports gives the buyer no credit.

Good habits

• Send the PDF to the customer the day you issue it (press Share), so they can accept it in the Invoice Management System (IMS).
• Keep the debit note number series separate from invoices and credit notes. This maker uses DN/26-27/001.
• At the end of each month, open Saved debit notes and give the list to your accountant with the month's invoices.