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What a GST credit note and debit note are, how they differ, when Section 34 of the CGST Act lets you issue each, what Rule 53 says they must contain, and worked examples with the numbers.
Checked against current rules for Credit and debit notes under Section 34 of the CGST Act (including the proviso on reduction of output tax liability and the timing for declaring a credit note) and the particulars in Rule 53(1A) of the CGST Rules; illustrative GST rate of 18% on 29 September 2026. Source: CBIC — Section 34, CGST Act, 2017; Rule 53, CGST Rules, 2017 (as amended).
A credit note is a document a supplier issues to the recipient after a tax invoice, to reduce the amount recorded in it. Under Section 34(1) of the CGST Act, a registered person who has issued a tax invoice may issue a credit note where the taxable value or tax charged in that invoice exceeds the taxable value or tax payable for the supply, where the goods supplied are returned by the recipient, or where the goods or services are found to be deficient.
So a credit note is tied to an earlier tax invoice and to one of those situations. It is not a generic apology document, a receipt or a discount coupon. Not every commercial refund or concession calls for a credit note. A business may also settle a dispute in other ways, and whether a given adjustment qualifies under Section 34 depends on the facts.
Free Credit Note / Debit Note Generator
Create a free Credit Note or Debit Note online with GST calculations, original invoice reference, professional A4 PDF and print support.
What is a GST credit note?
A credit note is a document a registered supplier issues to the recipient after a tax invoice, where the taxable value or tax charged in that invoice turns out to exceed what was payable, where the goods supplied are returned, or where goods or services are found to be deficient (Section 34(1) of the CGST Act). It reduces the amount in the original transaction and has to carry the particulars in Rule 53(1A).
What is a GST debit note?
A debit note is a document a registered supplier issues to the recipient where the taxable value or tax charged in a tax invoice is found to be less than the taxable value or tax payable for that supply (Section 34(3)). It increases the amount payable. The Act says the expression debit note includes a supplementary invoice.
What is the difference between a credit note and a debit note?
A credit note records a downward adjustment to an earlier tax invoice, so the recipient owes less. A debit note records an upward adjustment, so the recipient owes more. Both are issued by the supplier, both refer to the original tax invoice, and both are declared in the supplier's GST return.
When can a credit note be issued?
Section 34(1) lists three situations: the taxable value or tax charged in the invoice exceeds what was payable, the goods are returned by the recipient, or the goods or services are found to be deficient. A credit note is issued after a tax invoice already exists. Whether your particular adjustment falls within these situations depends on the facts, so check unusual cases with a professional.
When is a debit note issued?
Where a tax invoice has been issued and the taxable value or tax charged in it is less than what was payable for the supply, for example because of an understated price or a wrong tax rate. Section 34(3) says the supplier shall issue a debit note in that case. It is not a general way to add a fresh charge unrelated to an earlier invoice.
Is a credit note the same as a refund?
No. A credit note is a document that adjusts the invoice. A refund is a payment of money back to the customer. A business may settle a credit note by refunding money, by adjusting it against a later invoice, or by leaving it as a balance, depending on what was agreed. The credit note itself does not move any money.
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This article is general information based on the CGST Act and Rules as published by CBIC. It is not legal or tax advice for your specific transaction. The rate and figures in the examples are illustrations.
A debit note works in the opposite direction. Under Section 34(3), where a tax invoice has been issued and the taxable value or tax charged in it is found to be less than the taxable value or tax payable for that supply, the supplier shall issue a debit note to the recipient. It increases the amount payable against the original invoice.
The Act adds that, for its purposes, the expression debit note includes a supplementary invoice. In GST, then, a debit note is a supplier-issued upward adjustment to an earlier invoice, not a document a customer sends to a supplier.
Two meanings of debit note
In everyday accounting, a buyer may send a debit note to a supplier to show that the buyer is debiting the supplier's account, for example for returned goods. That is a business practice, not the GST debit note in Section 34. This article deals with the GST document the supplier issues.
The table compares the two GST notes in general terms. Exact treatment depends on the facts, so read it as a guide rather than a rule for every case.
| Aspect | Credit note | Debit note |
|---|---|---|
| Who issues it | The registered supplier, to the recipient | The registered supplier, to the recipient |
| Purpose | Records a downward adjustment to an earlier tax invoice | Records an upward adjustment to an earlier tax invoice |
| Effect on the original transaction | Reduces the value or tax recorded in the invoice | Increases the value or tax recorded in the invoice |
| Relationship to the original invoice | Refers to the tax invoice or invoices it adjusts | Refers to the tax invoice or invoices it adjusts |
| Typical reasons | Excess value or tax charged, goods returned, deficient goods or services | Value or tax charged was less than what was payable |
| GST impact | The supplier may reduce output tax liability, subject to the conditions in Section 34(2) | The additional tax is adjusted in the supplier's liability as prescribed |
| Practical accounting direction | The customer owes less, or the supplier owes the customer a balance | The customer owes more |
| Is it a tax invoice? | No, it is a separate document that adjusts one | No, though a debit note includes a supplementary invoice under Section 34 |
| Declared in return | In the return for the month it is issued, within the time limit in Section 34(2) | In the return for the month it is issued |
Section 34(1) names the situations. These practical examples fit within them:
Two cautions. First, the supplier's right to reduce output tax liability is conditional. Section 34(2) says no reduction is permitted if the input tax credit attributable to the credit note, where it was availed, has not been reversed by a registered recipient, or, in other cases, if the incidence of tax has been passed on to another person. Second, a credit note has a time limit for declaring it, covered below.
Post-supply discounts need particular care. Section 15(3)(b) of the CGST Act sets out when a discount given after the supply is excluded from the value of supply, and the wording of Section 34(1) on discounts has recently been amended by the Finance Act, 2026, in a provision the CBIC portal shows as yet to be notified. Confirm the position for a discount case before you rely on a credit note.
Section 34(3) applies where the taxable value or tax charged in an invoice is less than what was payable. Typical examples:
A debit note is for correcting an earlier invoice upward. A new, unrelated charge is a new supply and is billed on its own tax invoice. Where a debit note is issued for tax payable under Section 74, 129 or 130, Rule 53(3) says it must prominently carry the words INPUT TAX CREDIT NOT ADMISSIBLE.
A tax invoice records the supply itself. Under Section 31 of the CGST Act, the supplier issues it for a taxable supply, and the particulars it must carry are set out in Rule 46. A credit note or debit note comes later and only adjusts that invoice. It does not replace it, and it is not issued instead of it.
| Aspect | Tax invoice | Credit note | Debit note |
|---|---|---|---|
| What it does | Records a taxable supply and the tax charged | Reduces an earlier invoice | Increases an earlier invoice |
| When it is issued | For the supply, under Section 31 | After an invoice, in the Section 34(1) situations | After an invoice, where value or tax was under-charged |
| Refers to an earlier invoice | No | Yes | Yes |
| Governing provisions | Section 31, Rule 46 | Section 34, Rule 53(1A) | Section 34, Rule 53(1A) |
If you need the underlying invoice, the free GST invoice generator builds one with the tax calculated. How the invoice sits alongside the quotation and the proforma invoice is covered in quotation vs proforma invoice vs tax invoice. A proforma invoice or quotation is not a tax invoice, so a credit or debit note is not issued against one.
Rule 53(1A) of the CGST Rules lists the particulars a credit or debit note must contain. The table sets them beside what the free generator provides, so you can see what you would still need to add.
| Particular under Rule 53(1A) | Free generator |
|---|---|
| Name, address and GSTIN of the supplier | Business name and address are required; GSTIN is optional and checked for format only |
| Nature of the document | Printed as CREDIT NOTE or DEBIT NOTE from your choice of note type |
| Consecutive serial number, not more than sixteen characters, unique for a financial year | A note number field. It does not limit the length to sixteen characters or check uniqueness, so you need to do that |
| Date of issue | Note date field |
| Name, address and GSTIN or UIN of the recipient, if registered | Customer name is required; address and GSTIN are optional |
| Name and address of the recipient, address of delivery and State name and code, if the recipient is unregistered | No separate fields for delivery address or State code; you can type the address in the customer address field |
| Serial number and date of the corresponding tax invoice or bill of supply | Original invoice or bill number (required) and date (optional) in one reference field each |
| Value of taxable supply, rate of tax and the amount of tax credited or debited | Taxable amount per line, and a GST rate and tax type you choose, with the tax amounts calculated |
| Signature or digital signature of the supplier or authorised representative | Optional signatory name and an optional signature image |
Beyond the rule, some fields are useful for the business: the reason for the note, an HSN or SAC code per line, a note on how the adjustment will be settled, and contact details. The generator has a reason field, HSN or SAC per line, and a notes field for these. It does not add the words INPUT TAX CREDIT NOT ADMISSIBLE that Rule 53(3) requires in the Section 74, 129 or 130 cases, so add them yourself in those cases.
The generator prints one tax rate and type across all lines and works with a single original-invoice reference. If your note covers several invoices, or lines at different rates, check that the document you issue still meets Rule 53(1A).
These examples use made-up businesses and an illustrative GST rate of 18%. The rate that applies to your goods or services may differ, and real cases can turn on facts a short example leaves out.
Example A, a credit note. A Pune trader issued a tax invoice for 100 units at ₹1,000 each within Maharashtra. Taxable value ₹1,00,000, CGST at 9% ₹9,000 and SGST at 9% ₹9,000, total ₹1,18,000. The customer returns 10 units and the trader accepts the return.
| Aspect | Original invoice | Credit note | Net after credit note |
|---|---|---|---|
| Taxable value | ₹1,00,000 | ₹10,000 | ₹90,000 |
| CGST at 9% | ₹9,000 | ₹900 | ₹8,100 |
| SGST at 9% | ₹9,000 | ₹900 | ₹8,100 |
| Total | ₹1,18,000 | ₹11,800 | ₹1,06,200 |
The credit note names the original invoice number and date, gives the reason as goods returned, and the trader declares it in the return for the month in which it is issued. Whether the trader can reduce output tax depends on the Section 34(2) conditions, including the customer reversing the input tax credit if it had claimed it.
Example B, a debit note. A Delhi supplier issued a tax invoice to a customer in Haryana for 50 units at ₹400, taxable value ₹20,000, with IGST at 18% ₹3,600, total ₹23,600. The agreed price was ₹440 a unit, but the invoice was prepared at ₹400 by mistake.
| Aspect | Original invoice | Debit note | Net after debit note |
|---|---|---|---|
| Taxable value | ₹20,000 | ₹2,000 | ₹22,000 |
| IGST at 18% | ₹3,600 | ₹360 | ₹3,960 |
| Total | ₹23,600 | ₹2,360 | ₹25,960 |
The taxable value charged was less than the taxable value for the supply, which is the Section 34(3) situation, so the supplier issues a debit note for the ₹2,000 difference plus IGST on it. The customer then owes ₹25,960 in all, which is ₹22,000 plus 18% IGST.
Both notes are declared in the supplier's return. Section 34(2) says a credit note is declared in the return for the month in which it is issued, but not later than the thirtieth day of November following the end of the financial year in which the supply was made, or the date of furnishing the relevant annual return, whichever is earlier. Section 34(4) says a debit note is declared in the return for the month in which it is issued.
The tax liability is then adjusted in the manner prescribed. A credit note that misses the time limit may not be able to reduce output tax. Keep the note, the original invoice and the reason on file so the adjustment can be traced. This tool does not file returns.
You can create a free credit or debit note online and download it as a PDF. Choose the note type, enter your business and customer details, the note number and date, the original invoice number and date, and the reason. Add the adjustment lines with a taxable amount each, choose no tax, GST with CGST plus SGST or IGST, or a custom tax, then preview and download. The generator prints exactly what you enter and calculates the tax from your choice.
What the free generator does and does not do
It creates the document only. It does not file GSTR-1 or any return, does not connect to the GST portal, does not generate an e-invoice or IRN, does not look up or verify the original invoice, and does not decide whether your adjustment qualifies under Section 34. The GSTIN is checked for format only.
To see where the tax invoice sits in the wider sales process, read the quotation format and sample. For the money side, see the payment receipt guide, and for goods movement, the delivery challan article.
Does a credit note cancel an invoice?
Not as such. A credit note records an adjustment against the original tax invoice, which stays on record. Even where the credit note covers the full value, the two documents are read together. How to correct an invoice that was wrong from the start depends on the circumstances and on GST timelines, so confirm the right route for your case.
Can I create a credit or debit note online?
Yes. The free credit note and debit note generator lets you choose the note type, enter the supplier and recipient details, the original invoice number, the reason and the adjustment lines, and download a PDF. It creates the document only. It does not file your GST return or check whether the adjustment qualifies under Section 34.
Free Proforma Invoice Generator
Create a professional proforma invoice online for free — a preliminary commercial document with optional GST estimate, then preview, print or download it as a PDF.