Section 34 of CGST Act - Credit and Debit Notes
Section 34 of the Central Goods and Services Tax Act, 2017 governs GST credit notes and debit notes. It permits a supplier to correct specified post-invoice changes and prescribes how the resulting tax adjustment is reported.
What is a credit note under Section 34?
A credit note is a document issued by a registered supplier where the value or tax originally invoiced is higher than what is ultimately payable, goods are returned, or the goods or services supplied are deficient. Section 34 permits one or more credit notes for supplies made in a financial year.
Current Section 34 - explained clause by clause
Section 34(1) - When a credit note may be issued
Where one or more tax invoices have been issued and the taxable value or tax charged exceeds the taxable value or tax payable, or goods are returned, or the supply is deficient, the registered supplier may issue one or more prescribed credit notes for supplies made in a financial year.
2026 amendment note: The Finance Act, 2026 also provides for adding specified post-supply discounts under Section 15(3)(b) as a credit-note circumstance. As of 15 September 2026, the CBIC amendment history marks this insertion as not yet notified; it should therefore not be presented as an operative provision until brought into force.
Section 34(2) - Reporting and reduction of output tax liability
The supplier must declare the credit note in the return for the month in which it is issued. For reduction of output tax liability, the declaration cannot be later than 30 November following the end of the financial year in which the supply was made, or the date of furnishing the relevant annual return, whichever is earlier.
With effect from 1 October 2025, reduction of the supplier's output tax liability is not permitted where the input tax credit attributable to the credit note, if availed, has not been reversed by a registered recipient; in other cases, reduction is not permitted where the incidence of tax has been passed on to another person.
Section 34(3) - When a debit note must be issued
Where one or more tax invoices have been issued and the taxable value or tax charged is less than the taxable value or tax actually payable, the registered supplier must issue one or more debit notes containing the prescribed particulars.
Section 34(4) - Reporting a debit note
A registered person issuing a debit note must declare its details in the return for the month in which it is issued, and the tax liability is adjusted in the prescribed manner.
Explanation: For the CGST Act, the expression "debit note" includes a supplementary invoice.
Credit note vs debit note under GST
| Document | Typical Section 34 situation | GST effect |
|---|---|---|
| Credit note | Invoice value/tax was too high; goods returned; supply deficient. | May reduce output tax liability subject to Section 34(2) conditions and time limit. |
| Debit note | Invoice value/tax was lower than the amount actually payable. | Increases the supplier's tax liability and is reported in the return for the month of issue. |
Particulars of credit and debit notes - Rule 53
Section 34 requires the document to contain prescribed particulars. Rule 53 of the CGST Rules covers the particulars of a revised tax invoice and credit or debit notes, including supplier details, nature and serial number of the document, date of issue, recipient details, reference to the corresponding invoice or bill of supply, taxable value, tax rate and tax amount, and authentication as applicable.
Practical compliance points
A supplier should link each GST credit or debit note to the relevant original invoice or supply records, report it in the appropriate GST return, preserve supporting records, and verify the recipient-side ITC consequences before reducing output tax liability. A purely commercial or financial credit note does not automatically produce a GST tax adjustment unless the statutory requirements for a GST credit note and reduction of tax liability are satisfied.