Debit Notes and Credit Notes Under New GST Regime
What Are Debit Notes and Credit Notes Under New GST Regime
Credit notes and debit notes There comes a time when humans mistake in generating an entry or a transaction. These cases often lead to exception and a further reconciliation is required credit note and debit note between the interacting parties to make correct, such generates. This can happen due to a machine crash as well. Such a wrong situation leads to the creation of what we call as Debit Notes or Credit Notes, wherever applicable.
At any time there are value related errors, these documents come into play. Whether it is an upward revision or a downward revision in prices, they are always satisfy with the help of debit or credit notes. It is not just in India that these credit and debit notes are used, but are used all over globe the in generally accepted accounting parlance.
What are Debit Notes:
An invoice is raised at any time there is a purchase or sale transaction with a consideration. When such consideration falls short due to certain exceptions, or extra goods being delivered to the purchaser, then the seller shall issue a debit note in that case. Such a debit note will take care of the higher revision of prices in an already issued invoice and will confidential the purchaser of the future liability that he has to pay.
Debit notes are constructed in cases where there is a tax invoice provide, but the taxable value of the goods therein changes after such issuance. Similarly, there can be a tax invoice issued but a number of tax changes after such issuance. In one and other these cases, a seller has to detailed the purchaser about such change.
There is no identified format to issue a debit note, but it can be issued as a letter or a fixed document. It is mostly a document specifying future liability and having commercial implications. They increase the credit period of a transaction, but are affected after shipping of goods takes place.
powerful situation where a purchaser is returning the goods on account of some standerd issues, or shortage of quantities, etc. In such cases also, a debit note is raised to account for the difference.
Debit Notes of new GST regime:
GST takes care of all the reform made in a transaction. It is obvious to have a free flow of credits to the last mile in a GST scenario. Hence, dealers and assessees have to follow a tough regime of uploading and updating every single transaction that they enter into.
After all debit notes are a major change to an invoice, they have to be reported separately in the GST returns. This Debit notes are interpreted under section 2(36) of the Model GST Law.
Debit notes can be constructed in GST under two situations:
- When the amount of taxable value of the goods changes after issuance of invoice
- When a number of tax changes after issuance of invoice
The subsequent things are to be continue in the debit note, for proper update and reporting. while there is no predefined appearance for the same, necessary care has to be taken to mention these important details in the debit notes.
the address of the dealer and name supplying the goods or services
- GST Identification Number (GSTIN) of the supplier
- Nature of the document – debit note in bold, capital letters.
- Unique serial number assigned to the document
- Date of the document
- Name and address of the recipient of goods or services
- GST Identification Number (GSTIN) of the recipient
- When the recipient is an unregistered person, then name and address of place of delivery.
- The equivalent original tax invoice to which the debit note relates to
- Changes in taxable value of the goods or services, or changes in tax amount, as the case may be, for which such debit note is being raised.
- Calculator signature for online debit notes or physical signatures for paper-based documents.
The particular of debit notes have to be declared in the month following the month on which such debit note has been raised. This Debit notes can be issued anytime without any time limit.
What are Credit Notes?
Alike to the debit notes, credit notes are issued when there is a downward revision in prices of goods or services supplied. It can be compared to a negative invoice that has the ability to invalidate the effects of an invoice. It offers a reduction in the value of the invoice and thus, reduces the liability of the purchaser. It is often impose with a return of goods to the supplier. It always has a negative impact on the accounting balance in the books of the seller.
Sometimes, the purchaser is regrateful with the quality of product shipped to him. So that case, he shall return the goods to the supplier, and in return, the supplier issues the purchaser, a credit note to the extent of the value of the goods being returned. There is no predefined format in which the credit note has to be issued; rather it is an intimation to the purchaser about such credit being offered.
Credit Notes of new GST regime:
Credit note under GST takes care of credit notes as well, just like debit notes. Credit notes have to be issued by a taxable person, where there is a shortage of products supplied and for which there is no payment to be made by the purchaser. Since it has a profit oriented impact, the same has to be informed or declared in the month to which it overcome.
Competent credit note has to be issued based on an genuine invoice previously issued. The original invoice will get reduced to the extent of such credit notes. In some cases, the original invoice value can become zero. Credit notes are defined in section 2(35) of the Model GST Law.
Credit notes can be issued in the following cases:
- When the goods are returned by the recipient
- When the supplier has charged excessive tax, where a lower rate should have been charged.
- When the goods supplied are of inferior quality, and the same are returned to the supplier
Credit notes must also mention the details as noted above in case of debit notes. The particulars are the same in this case as well. equivalent credit notes must be indicate in the returns of the following month about which the credit note has been raised. Unlike debit notes where there is no time limit for issuance, credit notes have to be declared in earlier of the following dates:
- Annual return filing date or,
30th September of, following the year to which credit notes relate to.
From the above we can analyse that the due date of filing of annual return is 31st December and where the annual return is filed after 30th September, then the credit notes have to be declared on 30th September.
How to create Credit Note or Debit Note
You can easily create credit note in gstreporting.com from an invoice. referral of that invoice will be mentioned on the credit note. likewise, a debit note can be created from a purchase entry.
Gstreporting.com is GST compliant accounting software and takes care of the compulsory fields. These transactions will be available under respective GST returns accordingly.
Apart from this, you can also generate GST invoices from gstreporting.com