Free Debit Note Template

Having the right debit note Template is crucial for managing the accounting aspect of your business effectively. Instead of manually aligning with accounting practices, BusinessEzee offers a debit note Template that can be downloaded to expedite the closure of pending transactions.

What Is a Debit Note?

Sometimes, when a buyer needs to return a product to the seller after a transaction, they create and issue a debit note. This note, also called a debit memo, includes details of the returned item. It’s a formal way for the buyer to tell the seller that they’re not happy with the product and need to return it.

When Debit Note Is Issued?

Debit notes are used for various reasons:

Incorrect quantity or damaged goods: If the buyer receives the wrong quantity or damaged items, they issue a debit note.
Incorrect billing: Sometimes, billing errors occur due to human or technical mistakes, and a debit note is needed to correct them.
Invoice correction: If the seller makes a mistake on the invoice, they issue a debit note to fix it.
Buyer increases quantity: If the buyer wants to increase the quantity of products after the initial agreement, a debit note is issued.
Reminder for pending debt: Sellers can issue debit notes to remind buyers of any outstanding payments from previous purchases.

What is the Importance of Debit Note Under GST?

There are two situations when GST law allows a debit note to be issued:

When the tax rate changes after an invoice has been issued.
When the taxable value of specific goods or services changes after an invoice has been raised.

In GST, the details of a debit note are part of GSTR-1, which includes the month of product supply by the seller. The specifics of the debit note are part of the receiver’s GSTR-2A and GSTR-2B. After verification, the receiver can formally accept and submit it as part of their GSTR-3B.
Previously, it was mandatory to mention the original invoice number when issuing a debit note in GST. However, recent changes have delinked debit notes from the initial invoice. Now, the issuer can mention the place of supply to identify the type of supply, and mentioning the tax amount is sufficient when the debit note is issued due to a difference in rates.

These changes have also affected the time limit for a debit note and the treatment of Input Tax Credit (ITC). Previously, the time limit for availing the ITC was the date of the invoice, but now it is calculated based on the date of the debit note being issued.

What is the Difference Between Debit Note and Credit Note?

The main difference between a debit note and a credit note lies in who issues them. A buyer issues a debit note to a seller when they want to return goods or services, while a seller issues a credit note to a buyer as an acknowledgment of the return.

Apart from the issuing party, another key difference is that a debit note represents a positive amount and reduces the seller’s accounts receivable, whereas a credit note represents a negative amount and reduces the buyer’s accounts payable.

When a debit note is issued, a credit note needs to be issued in exchange for it to complete the acceptance procedure. Conversely, a credit note is issued once a debit note has been received.

What are the Contents in Free Debit Note Template?

Although there are no strict legal requirements for a debit note format, certain essential elements should be included:

Clear mention of ‘Debit Note’ at the top
Buyer’s relevant contact details
Unique ID number
Date of issuance
Details of the invoice in question
Seller’s relevant contact details including GSTIN
Amount and applicable tax rate
Signature of the relevant authority at the issuer’s end

Download - Free Debit Note Template

FAQs

What is a debit note format used for?

A debit note format is used to create debit notes easily by populating the preset format with relevant information.

Who issues a debit note and why?

A buyer issues a debit note to communicate to the seller that the received products need to be returned. It reflects a positive return for the buyer, and the purchase return books need to be updated as a result.

What details should be included in a debit note?

A debit note should include the words ‘Debit Note’ at the top, followed by the buyer and seller’s contact details, specific invoice details, and a unique identification number.

Is a debit note a legally binding document when issued?

No, a debit note is not a legal document when it is issued. However, when it is accepted by the seller, it becomes a legally binding document.

Is an electronic invoice necessary for commercial notes without GST?

Under section 34 of the CGST/SGST Act, an electronic invoice is necessary. Any commercial notes that do not have GST do not require electronic invoices.