Section 34 lets a supplier correct an invoice after the event — down by a credit note, up by a debit note. A credit note reduces the supplier's tax only within a time limit, and since 01.10.2025 only if the recipient has reversed the matching credit.
Key points
- Under section 34(1) of the CGST Act, 2017 a supplier may issue credit notes where the invoiced value or tax exceeds what was payable, goods are returned, or supplies are found deficient — one or more for supplies of a financial year.
- A credit note must be declared by 30 November following the end of the financial year of the supply, or the annual return if earlier.
- From 01.10.2025, the supplier's tax is not reduced unless the registered recipient has reversed the credit attributable to the credit note; for unregistered recipients, unless the tax incidence has not been passed on (proviso to section 34(2)).
- The Finance Act, 2026 adds post-sale discounts under section 15(3)(b) as a ground for credit notes, but that change has not yet been brought into force.
- A debit note is issued where the invoiced value or tax is less than payable; it includes a supplementary invoice.
The provisions
34(1)–(2)Credit notes
Statutory text
(1) 1[Where one or more tax invoices have] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient 7[or where a discount referred to in clause (b) of sub-section (3) of section 15 is given], the registered person, who has supplied such goods or services or both, may issue to the recipient 2[one or more credit notes for supplies made in a financial year] containing such particulars as may be prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than 3[the thirtieth day of November] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:
6[Provided that no reduction in output tax liability of the supplier shall be permitted, if the–
(i) input tax credit as is attributable to such a credit note, if availed, has not been reversed by the recipient, where such recipient is a registered person; or
(ii) incidence of tax on such supply has been passed on to any other person, in other cases.]
* Enforced w.e.f. 22nd June, 2017.
1. Substituted for "Where a tax invoice has" by s. 15 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.
7. Inserted (w.e.f. yet to be notified) by section 154 of The Finance Act, 2026 No. 4 of 2026 dated 30.03.2026.
2. Substituted for "a credit note" by s. 15 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.
3. Substituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022.) by s. 102 of The Finance Act 2022 (No. 6 of 2022). for "September".
6. Substituted (w.e.f. 01.10.2025) by section 126 of the Finance (No. 7) Act, 2025.
The words "or where a discount referred to in clause (b) of sub-section (3) of section 15 is given" in sub-section (1) were inserted by the Finance Act, 2026 with effect from a date yet to be notified; they are not yet in force, though the CBIC text shows them without that qualification.
34(3)–(4)Debit notes
Statutory text
(3) 4[Where one or more tax invoices have] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient 5[one or more debit notes for supplies made in a financial year] containing such particulars as may be prescribed.
(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed.
Explanation.-For the purposes of this Act, the expression "debit note" shall include a supplementary invoice.
4. Substituted for "Where a tax invoice has" by s. 15 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.
5. Substituted for "a debit note" by s. 15 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.
What it means
Where the invoiced value or tax is less than payable, the supplier issues a debit note (one or more for supplies of a financial year since 01.02.2019) and declares it in the return of the month of issue; tax is payable with that return. A supplementary invoice is a debit note (Explanation). For the recipient, credit on a debit note is governed by section 16(4) by reference to the date of the debit note.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- What is the last date to issue a GST credit note?
- It must be declared by 30 November following the end of the financial year of the supply, or the date of the annual return if earlier (section 34(2) CGST).
- Can a supplier reduce its tax on a credit note if the buyer has not reversed credit?
- From 01.10.2025, no — for a registered recipient the reduction is allowed only if the recipient has reversed the attributable credit (proviso to section 34(2)).
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Grounds: excess value or tax in the invoice, goods returned, or goods or services found deficient. Since 01.02.2019 a single credit note may cover several invoices of the same financial year. The credit note must be declared in the return of the month of issue but not later than 30 November following the year of supply (from 01.10.2022; earlier, the September return) or the annual return if earlier; the tax liability is adjusted as prescribed.
The proviso, substituted by the Finance Act, 2025 from 01.10.2025, conditions the supplier's reduction on the recipient's action: if the recipient is registered, the credit attributable to the credit note must have been reversed by it; otherwise, the incidence of tax must not have been passed on. Earlier the proviso turned only on whether the incidence of tax and interest had been passed on.
Commercial credit notes that do not reduce tax are outside this section; see CBIC Circular 251/08/2025-GST on post-sale discounts and section 15(3).