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CA Final · Indirect Tax Laws · Tax Invoice, Credit and Debit Notes

Sharma Textiles Pvt Ltd, a registered supplier in Surat, issued a tax invoice in July 2024 (FY 2024-25) charging tax on a taxable value of Rs 5,00,000, when the correct taxable value was Rs 4,60,000. The buyer is a registered person who has accepted the correction. Which document should Sharma Textiles issue, and what particulars must it carry about the original supply?

A credit note should be issued, because the tax invoice shows a taxable value higher than the correct value. Section 34(1) allows a credit note in such cases, and it must mention the serial number and date of the corresponding tax invoice. Debit notes are only for under-charged invoices.

  1. AA credit note, carrying the serial number and date of the corresponding tax invoiceCorrect
  2. BA debit note, carrying the serial number and date of the corresponding tax invoice
  3. CA revised tax invoice marked 'Revised Invoice' with no reference to the original invoice
  4. DA supplementary invoice, since the taxable value charged exceeds the correct value

Explanation

Where the taxable value or tax charged in the tax invoice exceeds the taxable value or tax payable, the supplier may issue a credit note under section 34(1). The credit note must contain the serial number(s) and date(s) of the corresponding tax invoice(s). A debit note or supplementary invoice applies only where the value charged is less than what is payable.

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