Purchasing and Selling of goods are very common in day to day life, and in the same way, returns of goods are also a very usual thing nowadays. Debit Note and Credit Note are used while the return of goods is made between two businesses.

Debit Note is issued by the purchaser, at the time of returning the goods to the vendor, and the vendor issues a Credit Note to inform that the returned goods have been received by him. People are quite puzzled when they are asked to distinguish the two terms. So, here in this article we are going to explain you the differences between a Debit Note and Credit Note.

Debit Note

It is a note issued by the vendor making the supply in the case where the consideration for the supply is increased after an invoice has already been issued. This can be the result of, amongst others; the reduced rate of VAT being used instead of a standard rate of tax (14%), a wrongly reduced quantity of goods is invoiced etc.

The debit note should contain the following information:

• the words ‘debit note’ in a prominent place;
• the commercial name, postal address, physical address, Taxpayer Identity Number of the vendor making the supply;
• the commercial name, postal address, physical address, Taxpayer Identification Number of the vendor receiving the supply;
• the date of issue of the debit note;
• a brief explanation of the circumstances which gave rise to the issue of the debit note;
• sufficient information to identify the taxable supply to which the debit note relates;
• the taxable value of the supply shown on the VAT invoice, the correct taxable value, the difference between the two amounts and the VAT relating to the difference (that is, the VAT overcharged).

Credit Note

It is a note issued by the vendor making the supply in the case where the consideration for the supply is reduced after an invoice has already been issued. This can be the result of, amongst others, cancellation of the supply, a discount offer etc.

The credit note should contain the following information:

• the words ‘credit note’ in a prominent place;
• the commercial name, postal address, physical address, Taxpayer Identity Number of the vendor making the supply;
• the commercial name, postal address, physical address, Taxpayer Identification Number of the vendor receiving the supply;
• the date of issue of the credit note;
• a brief explanation of the circumstances which gave rise to the issue of the credit note;
• sufficient information to identify the taxable supply to which the credit note relates;
• the taxable value of the supply shown on the VAT invoice, the correct taxable value, the difference between the two amounts and the VAT relating to the difference (that is, the VAT overcharged)