Credit notes and debit notes under Section 34

When credit and debit notes can be issued, the time limit for declaring credit notes, and how they affect GSTR-1/3B.

• Credit note: issued by the supplier when the taxable value or tax charged is found to exceed what is payable, goods are returned, or services are found deficient.
• Debit note: issued when the taxable value or tax charged is less than what is payable.
• Time limit for credit notes: must be declared in the return no later than 30 November following the end of the financial year in which the supply was made, or the date of filing the annual return, whichever is earlier. The supplier's tax reduction is also subject to the recipient not having passed on the incidence, or having reversed ITC.
• Both are reported in GSTR-1 (CDNR for registered recipients, CDNUR for unregistered) and affect net liability in GSTR-3B.
• Post-sale discounts can reduce value only if the conditions in Section 15(3) are met. Financial/commercial credit notes without GST adjustment are also used in practice.