What are credit and debit notes?

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Used to make correction in the invoices.

Debit and credit notes that must be issued in accordance with the Article 54 of VAT Implementing Regulation, and which are generated and stored in a structured electronic format through electronic means. Paper notes that are converted into electronic format through copying, scanning, or any other method, are not considered electronic notes for the purposes of this Regulation.

Both debit notes and credit notes are official accounting documents, both used by businesses but for different purposes.

• Separate from an invoice, these notes let buyers know how much existing business credit they have or conversely, how much they still owe (udhari aur baqaya).
• They’re also critical to shipment tracking, payments due or if any credit remains on the account.

Debit note or debit memo #

A debit note, or a debit memo, is a document issued by a seller to a buyer to notify them of current debt obligations.

• Used in B2B and B2C transactions.

• Debit notes are issued by the sellers in order to issue a correction in value to buyers. Debit notes are used for increasing the value of the original invoice or the VAT amount. Debit notes follow the same format as the invoice for which they have been issued.

Credit note or credit memo #

Credit notes are issued by the sellers in order to refund buyers and are used to correct invoices information if generated with an error. Credit notes follow the same format as the invoice they have been issued upon.

A credit note is a document issued by a seller to a buyer to notify that credit is being applied to their account. As a seller, you may issue a credit note when there’s a need to cancel all or part of an invoice for a variety of reasons, including:

1. Changes to an order after an invoice is issued
2. Goods returned or services rejected
3. Goods were damaged during shipping
4. Pricing mistakes on the original invoice