A debit note is issued when the value of an earlier invoice needs to be increased, for example an undercharge, a price revision, or additional goods supplied. It adds the corresponding GST, increasing the supplier’s liability and the buyer’s eligible input tax credit.
Like credit notes, debit notes are reported in GST returns and linked to the original invoice. Together they keep tax correct when transaction values change after invoicing.
Suppose goods were invoiced at ₹10,000 with 18% GST when the agreed price was ₹12,000. The debit note is raised for the ₹2,000 shortfall plus ₹360 of tax. The supplier's receivable from the customer rises by ₹2,360, sales and output tax increase correspondingly, and the buyer books additional purchase cost of ₹2,000 with ₹360 of input tax credit — provided the note flows through the supplier's return into the buyer's GSTR-2B.
Timing works in the buyer's favour more than many realise: the window for claiming credit on a debit note is reckoned from the note itself, as notified, not from the date of the original invoice. On the supplier's side, the extra tax is paid with the return for the period in which the note is issued, and where the increase corrects an earlier supply, interest on the differential can arise.
Confusion between commercial and statutory documents causes most errors here. In traditional Indian practice a buyer raises a debit note on the supplier when returning goods — but under GST that document adjusts nothing; only the supplier's paperwork moves tax. Other slips include issuing a debit note where a fresh invoice for a new supply is proper, and omitting the reference that ties the note back to the original invoice.