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

Sharma Traders, a registered supplier, issued a tax invoice dated 10 July 2025 (FY 2025-26) for goods to Verma Retail, a registered buyer. In October 2025 Sharma found that the taxable value in that invoice was less than the correct taxable value. What must Sharma do under the CGST Act?

The supplier must issue a debit note to the recipient because the invoiced taxable value was less than the correct value. Its details are declared in the return for the month in which the debit note is issued, and the tax liability is adjusted accordingly.

  1. AIssue a debit note to the recipient and declare it in the return for the month in which the debit note is issuedCorrect
  2. BCancel the original invoice and issue a fresh invoice with the original date
  3. CIssue a credit note and declare it in the return for the month of the original supply
  4. DDo nothing, since a short-charged value cannot be corrected after the invoice is issued

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 must be declared in the return for the month in which the debit note is issued. A credit note is meant for excess value, returns or deficiency, so option C is wrong.

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