Debit note

A debit note is the mirror image of a credit note. Where a credit note reduces the amount owed, a debit note increases it (or, when issued from the buyer side, formally records a buyer's claim against the supplier). The two are used in opposite scenarios but follow the same audit-trail discipline: each references a specific original invoice number and a specific reason.

From the seller's perspective, the typical case is correcting under-billing. The original invoice missed a line, used a stale price, or under-charged tax. Issuing a debit note adjusts the balance upward, with its own number and the same tax treatment as the original. From the buyer's perspective, the typical case is the buyer-issued debit note as a formal complaint and credit claim: "we are deducting this much from our next payment because of returned goods or a billing error". The supplier then issues a credit note in response.

For VAT and GST, a debit note that increases the tax owed has to be reported in the same way as a fresh invoice for the additional amount. The original invoice number must be cited on the debit note so the tax authority can match the adjustment to the original supply.