What Is Debit Note? Definition & Examples

Detailed Explanation

Issued by the supplier, a debit note adds an amount to a supply that has already been invoiced: goods or hours left off the original invoice, a price increase agreed afterwards, or tax undercharged by mistake. It quotes the original invoice number and date, bills only the difference plus tax on it, and leaves the original invoice unchanged. In India's GST law a supplementary invoice counts as a debit note. It is the opposite of a credit note, which reduces the amount owed. In some businesses, especially for purchase returns, the buyer sends a “debit note” to the supplier to record that it has debited the supplier's account and to ask for a credit note in return. That is a buyer's document, not the supplier's tax adjustment, so label clearly which one you are sending.

Example

After invoicing 40 hours, a supplier finds 6 unbilled hours at $95 and issues debit note DN-0007 for $570 plus tax, quoting the original invoice number and date.

Why It Matters

Editing a sent invoice breaks the audit trail and the customer's records. A debit note adds the extra charge as its own numbered document, so both sides can match it to the original supply and the right tax period.

Key facts

UK: HMRC's VAT Notice 700 (paragraph 18.2.4) says a valid debit note must reflect a genuine mistake, undercharge or agreed increase in the value of the supply and be issued within 14 days of the increase being agreed between supplier and customer.
The same paragraph lists what a UK debit note shows: its own identifying number and date, the supplier's name, address and VAT registration number, the customer's name and address, the number and date of the original VAT invoice, a description of the goods or services the increase applies to, the increase excluding VAT, and the rate and amount of VAT debited in sterling.
The VAT rate on a UK debit note is the rate in force at the tax point of the original supply (Notice 700, paragraph 18.2.5). Where the debit note does not correct an error already declared, the VAT adjustment belongs in the period in which supplier and customer agree the increase (paragraph 18.2.6).
India: under section 34(3) of the CGST Act, a registered supplier issues one or more debit notes when the taxable value or tax on a tax invoice is less than what is payable, and declares them in the return for the month of issue (section 34(4)). The Explanation to section 34 says a debit note includes a supplementary invoice.
Indian debit notes must carry the particulars in CGST Rule 53(1A), including a consecutive serial number of up to 16 characters unique for the financial year, the serial numbers and dates of the corresponding tax invoices, and the taxable value, rate and tax debited.
InvoiceQuickly has no debit note document type. To bill an undercharge, create a new invoice for the difference and put the original invoice number and the reason in the line description or notes. Credit notes, the opposite adjustment, are available on Pro.
This entry is general information, not tax advice. Check the current rules with HMRC, the CBIC or an adviser.

How it shows up in practice

Illustrative example: a UK VAT-registered joinery firm issues INV-0318 on 2 September for 20 oak doors at £180 each (£3,600 plus £720 VAT). On 10 September the customer agrees to pay £15 more per door for a fire-rated finish added on site. Rather than editing INV-0318, the firm issues debit note DN-0019 on 16 September, within 14 days of the agreement. It quotes INV-0318 and its date, describes the fire-rated upgrade on the 20 doors, and charges £300 plus VAT at 20% of £60, a total of £360, at the rate that applied to the original supply. The VAT adjustment goes in the VAT period that includes 10 September, when the increase was agreed, and the customer's accounts payable team can match DN-0019 to the original invoice without querying it.

Common mistakes

Editing or reissuing the original invoice instead of issuing a debit note for the difference.
Leaving out the original invoice number and date, so the customer cannot match the extra charge.
Using the current VAT rate instead of the rate at the original supply's tax point.
Sending a debit note when you mean a credit note: a debit note raises the amount owed, a credit note reduces it.
Missing HMRC's 14-day window after the increase is agreed.
Numbering debit notes outside any consecutive series, which in India must be unique for the financial year.

Frequently asked questions

What is a debit note vs a credit note?

A debit note increases what the customer owes, for example after an undercharge or an agreed price rise. A credit note reduces it, for example after returned goods, an overcharge or a discount agreed after invoicing. Both quote the original invoice and leave it unchanged.

Why would a debit note be sent?

A supplier sends one when the original invoice was too low: items or hours were left off, a price increase was agreed later, or tax was undercharged by mistake. A buyer may also send one to a supplier to record a return or shortfall and ask for a credit note.

Is a debit note a purchase return?

Not by definition, but buyers often use one for a purchase return: the buyer debits the supplier's account in its own books and sends a debit note asking for credit. Under India's CGST Act the credit note that reduces the tax is issued by the supplier, so the buyer's debit note does not replace it.

What is the difference between a debit note and an invoice?

An invoice bills a supply for the first time. A debit note bills an increase on a supply that has already been invoiced and refers back to that invoice. In India's GST law, a supplementary invoice is treated as a debit note.

When does a UK debit note need to be issued?

Within 14 days of the supplier and customer agreeing the increase, according to HMRC VAT Notice 700 paragraph 18.2.4. It must show the original invoice number and date and charge VAT at the rate that applied to the original supply.

Can I issue a debit note in InvoiceQuickly?

Not as a separate document type. Create an invoice for the extra amount and put the original invoice number and the reason in the description or notes. InvoiceQuickly applies one tax percentage per invoice, does not split CGST and SGST and copies saved VAT or GST IDs to new invoice PDFs, so it is not a good fit where your tax rules require those details on the document.

Related Resources

Last verified: October 2026

What Is Debit Note?