Short answer: Under section 34 of the CGST Act, a supplier issues a credit note when the taxable value or tax on an invoice turns out higher than it should be (for example goods returned, a discount or an excess charge), and a debit note when it turns out lower (for example a price increase). A credit note must be declared by 30 November after the end of the financial year of the supply, or the date of filing the annual return, whichever is earlier. Both are reported in GSTR-1.
When to issue which
| Situation | Document | Effect on tax |
|---|---|---|
| Goods returned by the buyer | Credit note | Reduces your output tax |
| Discount after the sale, overcharge, short supply | Credit note | Reduces your output tax |
| Price increased after the invoice, undercharged tax | Debit note | Increases your output tax |
Fields required (rule 53)
Name, address and GSTIN of the supplier; nature of the document; a consecutive serial number up to 16 characters; date; name, address and GSTIN of the buyer; the original invoice number and date; the taxable value, rate and amount of tax being credited or debited; and the signature.
Time limit
- Credit note: declare it in GSTR-1 by 30 November following the end of the financial year of the original supply, or the date of the annual return, whichever is earlier.
- Debit note: no time limit to issue, but the buyer must claim ITC on it within the section 16(4) limit counted from the financial year of the debit note.
Reporting in GSTR-1
- Notes to registered buyers: table 9B (CDNR).
- Notes to unregistered buyers for inter-state invoices above the B2C (large) limit: table 9B (CDNUR).
- Other B2C notes: adjust the B2C (others) figures of the month.
Example
You sold goods for ₹50,000 + 18% IGST (₹9,000). The buyer returns goods worth ₹10,000. You issue a credit note for ₹10,000 + ₹1,800 IGST, quoting the original invoice, and report it in table 9B of GSTR-1 for the month you issue it.
Frequently asked questions
Can I issue one credit note for many invoices?
Yes. Section 34 allows one credit or debit note for one or more invoices issued to the same buyer in a financial year.
Is a financial credit note (no GST) allowed?
Yes, for commercial discounts not linked to the invoice; it has no GST effect and the tax is not reduced.
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Official sources
Rules on this page come from these official government sources. Check them for the latest position.
More guides
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Every field a GST tax invoice must have (rule 46), copies, time limits and e-invoicing.
GSTR-1 vs GSTR-3B
What each return contains, due dates for monthly and QRMP filers, late fee and how they link.
HSN code rules
How many HSN digits you must write by turnover, SAC for services and the GSTR-1 HSN summary.
Last updated: 7 November 2026. Published by S Jha Legal Sansar & Associates. Rules as applicable for FY 2026-27; laws change, so check the official source before you act. Editorial policy · Disclaimer