Section 34 of CGST Act, 2017 : Section 34: Credit And Debit Notes

Explanation using Example

Imagine a situation where "ABC Electronics Ltd." sold 50 TVs to "XYZ Supermarket" at a unit price of ₹30,000 plus applicable GST. Later, they realize that the correct price was actually ₹28,000 per TV. As per Section 34(1) of the CGST Act, ABC Electronics Ltd. can issue a credit note to XYZ Supermarket for the excess amount charged.

After issuing the credit note, as required by Section 34(2), ABC Electronics Ltd. must declare the details of this credit note in their GST return for the month in which the credit note was issued and adjust their tax liability accordingly, ensuring this is done before the prescribed deadline.

Conversely, if ABC Electronics Ltd. had undercharged XYZ Supermarket, charging only ₹28,000 instead of the correct price of ₹30,000 per TV, they would issue a debit note for the shortfall. This action is in line with Section 34(3).

In accordance with Section 34(4), the details of the debit note would then be declared in the monthly GST return of the month when the debit note was issued, and ABC Electronics Ltd.'s tax liability would be adjusted as prescribed.