A Debit Note is a document issued by a buyer to a seller to formally request a credit for returned goods, incorrect charges, or other adjustments. It increases the amount payable by the buyer to the seller and is considered an adjustment in the books of accounts.
Key Features:
- Issued by: Buyer to Seller.
- Purpose: To notify the seller of a debit made in the buyer’s account.
- Usage Scenarios:
- Return of goods due to defects, damage, or incorrect supply.
- Overcharging in the invoice.
- Adjustment for earlier transactions.
- Accounting Impact: The buyer debits the seller’s account, reducing the liability to pay or increasing a receivable.
For Example:
A company receives goods worth ₹500 but finds ₹100 worth of goods defective. The company issues a debit note for ₹100 to adjust the payable amount.