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CA Intermediate · Taxation · Tax Invoice; Credit and Debit Notes

Kapoor Industries, a registered supplier, issued a tax invoice for Rs 1,00,000 plus 18% GST in March 2026 (financial year 2025-26). In June 2026, it discovered it undercharged the price and issued a debit note for an additional taxable value of Rs 20,000 plus 18% GST. In which period will the tax liability on this debit note be taken, and what is the additional GST?

The additional GST is Rs 3,600 (18% of Rs 20,000), and it falls in the tax period in which the debit note is issued, June 2026. A debit note increases liability and is reported in the month of its issue, not in the month of the original invoice.

  1. AMonth in which the debit note is issued, GST Rs 3,600Correct
  2. BMonth of the original invoice (March 2026), GST Rs 3,600
  3. CMonth in which the debit note is issued, GST Rs 18,000
  4. DMonth of the original invoice, GST Rs 21,600

Explanation

Tax liability on a debit note is accounted for in the month in which the debit note is issued (June 2026), not the original invoice month. GST is 18% of Rs 20,000 = Rs 3,600. The option citing Rs 18,000 wrongly applies 18% to the original value, and the original-month options use the wrong period.

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