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

Sharma Textiles Pvt. Ltd., a registered supplier, issued a tax invoice in August 2025 (FY 2025-26) to Kapoor Garments, a registered dealer, for goods. Six months later it found that the taxable value on the invoice was lower than the correct taxable value for that supply. Which document must Sharma Textiles issue, and in which return must it declare the details?

Sharma Textiles must issue a debit note, because the taxable value on the invoice is lower than the value actually payable. Under section 34(4), the debit note details are declared in the return for the month in which the debit note is issued, not the month of the original invoice.

  1. AA credit note, declared in the return for the month in which the original invoice was issued
  2. BA debit note, declared in the return for the month in which the debit note is issuedCorrect
  3. CA debit note, declared in the return for the month in which the original supply was made
  4. DA revised invoice, declared in the annual return only

Explanation

Where the taxable value or tax charged in the invoice is less than what is payable, the supplier shall issue a debit note. The details are declared in the return for the month in which the debit note is issued, and the tax liability is adjusted accordingly. Declaring it in the original month's return is wrong because the Act ties the declaration to the month of issue of the debit note.

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