Skip to content

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

Verma & Co. (registered, Mumbai) issued an invoice on 15 April 2025 for taxable value Rs 5,00,000 plus CGST and SGST at 9% each. On discovering in October 2025 that the taxable value was understated by Rs 50,000 and the rate is unchanged, it issues a document to the recipient for the extra amount. Which document is issued and what is the additional tax amount?

A debit note is issued because the taxable value in the original invoice was understated. The additional tax is 18% of Rs 50,000, i.e. Rs 9,000, split equally as Rs 4,500 CGST and Rs 4,500 SGST. A credit note applies only where the value or tax charged was excessive.

  1. ADebit note; additional tax Rs 9,000 (Rs 4,500 CGST + Rs 4,500 SGST)Correct
  2. BCredit note; additional tax Rs 9,000
  3. CDebit note; additional tax Rs 4,500 only
  4. DRevised invoice; additional tax Rs 18,000

Explanation

When the taxable value or tax charged in an invoice is less than what is actually payable, the supplier issues a debit note. Tax is 18% of Rs 50,000 = Rs 9,000, split into Rs 4,500 CGST and Rs 4,500 SGST. A credit note is for excess value or tax, so option two is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Tax Invoice; Credit and Debit Notes shows your real accuracy, how long you take and where you lose marks.

Practise Tax Invoice; Credit and Debit NotesFree diagnostic mock

More Tax Invoice; Credit and Debit Notes questions