Debit Note Format in Excel
Vyapar will make it easy for you to handle your company's debit and credit note requirements. The app's primary goal is to make accounting accessible to everyone. Vyapar is perfect if you do not want to waste time learning advanced software.
What is a debit note?
A debit note is a document a buyer prepares when returning goods acquired on credit or by a seller to alert the customer of existing financial obligations. A seller can use a debit note to remind a company of a pending invoice or to inform it that money is due. It will include:
- The total anticipated credit.
- An inventory of the returned items.
- The reason for their return for returned items.
Reasons for issuing a debit note:
A client can issue a debit note if they purchase items from a seller or supplier and want to return them for any reason.
A customer begins a purchase return for products when the following conditions exist: the provider delivers faulty or damaged goods; the shape, size, or quantity is incorrect;
- The provider failed to provide goods or services on schedule;
- A bill contains calculation errors;
- Suppliers levied higher taxes on goods or services;
- The buyer does not wish to buy the goods or services.
The seller may also issue a debit memo in the following circumstances: when the seller has to make changes to the invoice.
- When there is a billing amount adjustment.
- When a buyer increases the size of their order.
- To bring the buyer's attention back to their present debt.
How Does a Debit Note Work?
In most cases, a debit note, also known as a debit memo, is used in business-to-business transactions. Such transactions sometimes include an extension of credit, which means that a seller ships items to a company before the buyer's cost is paid.
The notice informs the customer that the seller has deducted money from their account. Although actual products are being exchanged, real money is not transferred until an invoice is given. Instead, debits and credits are recorded in an accounting system to manage dispatched inventories and outstanding payments.
Debit notes are distinct from invoices because they are typically formatted as letters and may not necessitate immediate payment. It is true when the debit note is used to notify the buyer of upcoming debt responsibilities based on amounts not yet formally invoiced.
Time limit to Issue a Debit Note
A buyer can issue a debit note at the earliest of the following.
On or before November 30th following the end of the financial year in which a person made such supply;
On or before the date of filing the annual return
You should note that under section 30(2), a person issuing a debit note must file yearly returns on or before December 31st of the fiscal year following the relevant fiscal year.
If such an annual return is filed after November 30th, the time restriction for issuing credit/debit notes will be November 30th only.
If the buyer fails to issue a debit note within the specified time frame, the buyer's tax duty, interest charge, and penalties will increase.
Debit Note Vs Credit Note
Significant differences between credit and debit notes are as listed below:
A Debit note or debit memo is a document that reflects that a debit is made to the other party's account. On the other hand, a credit note is an instrument used to inform the other party's account is credited in the party books.
A Debit note represents the positive amount while a Credit note represents the negative amount, which means a debit note lowers account receivables. In contrast, a credit note lowers the account payables.
In the case of a debit note, the purchase book is updated. Meanwhile, the sales return book is updated in the case of credit notes.
The customer generally issues a debit note to the supplier (seller of the goods). On the other hand, the credit note is issued by the supplier (the seller of the goods) to the customer (the buyer of the goods).
A debit note is issued during the credit purchase. In contrast, the credit note is issued during the event of credit sales.
A debit note is another form of purchase return of the product. However, the credit note is another form of sales return.
A debit note is issued in exchange for credit notes. Meanwhile, credit notes are issued in exchange for debit notes.
As a standard practice, a debit note is prepared in blue ink, while a credit note is written in red ink.
Why do you need a Debit Note format?
Let's understand why the debit note is required through the example:
The buyer issues the debit note or debit memo to initiate a purchase return for the goods procured on credit. It is done when the supplier fails to deliver goods or services on time or when they are overbilled.
Further, a debit note is issued when there might be a calculation error or when a buyer isn't interested and no longer wants to make a purchase. When higher taxes are applied on goods and services, or when goods offered to the buyer are damaged, defective or inappropriate in shape, size, or quantity.
The sellers can also issue the debit note when the seller wants an adjustment in the invoice, when the seller changes or increases the billing account, when the buyer suddenly increases the order quality, or to remind the buyer about their current debt obligations.
Debit Memo usually includes:
- A serial number.
- Date of the note.
- A brief description of the prior business to business transaction.
- Details of the item return.
- The signature of an appropriate company authority.
A Debit Note invoice can include the following information:
- The name of the company or issuer.
- Zip code, issuer's address, web address, and phone number.
- Date of creating a debit note.
- Date of placing the order.
- Order number for which it is issued.
- Order terms and conditions.
- Company's name (buyer).
- Customer Id-as stated in the invoice.
- Zip code, buyer's address, email id, and phone number.
- Name of the contact person (buyer).
- Invoice details- item name (goods and services), the reason for debit, item description, quantity, price, and the total amount.
How to create a Debit Note format in word using the Vyapar app?
You can create a debit note using the Vyapar app. To make one, open the Vyapar app. There are two options available to log the entry of debit notes.
1. Click on add more (+) button.
- There you will find a purchase return. Click on it, and there is also a shortcut key(Alt+L).
- Enter customer number, name, and invoice number. It can be adjusted against that invoice so that you can track it in the future.
- Put the details that must be included and the amount in the received amount. If you take your money back, then fill that box, or if you don't, leave it.
- Save the debit note and share it.
2. Go to the left menu.
- There will be a purchase section. Click on it.
- Find whose products are being returned here.
- You can search according to date, invoice number, amount, or invoice balance, through any following method.
- The invoice will appear on your screen. Click on three dots.
- Then click on the convert to return option.
- Debit Note is ready with Vendor's name, invoice number, and other essential details.
- Then in the item list, you can delete the other products by using the delete icon, and you will go with only those products whose Debit Note you have to make.
- Then save this invoice after altering the necessary changes.
You can check the following transaction in the party statement.
Additional benefits of using the Vyapar app for Debit Note requirements:
Convenient Data Entry:
As we all know, manual bookkeeping requires data entry. You will spend most of your time filling cash registers and spreadsheets as a bookkeeper. Luckily, here Vyapar app automates these time-consuming tasks to focus on what matters to you.
Using the debit note maker app, you can modify your bill amounts seamlessly and track the changes. Further, you can create and manage invoices and debit notes and seamlessly maintain accounts.
Speed And Accuracy:
Faster billing is essential for running any business. Generating GST-compliment invoices, setting bill payments, and estimates on the go is something we need to do. Vyapar app for desktop here lets you do it all seamlessly.
Thus with the help of the Vyapar app, you can add pace to your business operations and achieve your goals. Further, automation will eliminate the possibility of making errors while creating debit notes.
Efficient inventory management:
With the help of the Vyapar app, you can effectively track and manage inventory. Its dashboard will provide you with real-time insights into your stock inventory level. Vyapar will let you determine which items are about to run out of stock.
The data adjusts with the entry of invoices, expenses, and debit and credit notes automatically. So, you can place an advance order with your suppliers before you run out of them in your store.
A vast number of SMEs spend at least more than INR 50000 a year on accounting and administrative costs. Vyapar app will eliminate all the extra costs so you can use your money for business growth.
Further, it will eliminate manual work and automate various business processes. You can access the premium features in the Vyapar app to create personalized debit and credit notes at a small subscription cost.
Vyapar app helps you perform your business transaction both online and offline. You don't have to worry about having an active internet connection to create debit notes.
The Vyapar app helps you to use the free debit note format to create and send debit notes. Further, you can also generate invoices, record expenses, and manage your cash book.
Vyapar app also offers a lot of themes to change your debit note format at your own will. You can make the changes according to meet your unique business requirements. Vyapar also offers professional invoice formats that will let you send well-designed invoices.
Using the app, you can manage the bills and keep track of debit and credit notes to manage payments effectively. Personalized debit notes can help build a positive brand outlook. It can help showcase your professionalism.
Bank account management:
We all know that managing multiple bank accounts and payment options is not an easy task. But the Vyapar app or PC makes adding and managing multiple bank accounts much easier. It supports POS devices and QR codes.
It can help you get payments through credit cards, debit cards, UPI, and e-wallets to ensure efficient payments. You can also use the Vyapar dashboard to tally your bank statements and monitor your cash flow.
Other valuable features of the Vyapar app
GST Billing and invoicing:
These days creating GST-compliant accurate invoices is essential to run your Business throughout India. Vyapar supports various types of mixed, credit, and proforma invoices. It helps create debit and credit notes too.
With the help of Vyapar billing software, you can create GST bills that comply with India's GST laws. It automates your billing requirements which is a great help in running your respective businesses. The Vyapar assists small and medium businesses to save more time in accounting.
Here, you can create a GST bill in both online and offline modes in a few simple and easy steps, which will help you keep your account updated. Vyapar app makes sharing your invoice with other business owners and customers easy.
Vyapar software offers outstanding security features that ensure data security and provide safe authorized access. It comes with auto backup to Google-drive and manual backup to Google-drive, email, and local drive.
Using Vyapar ensures that your data is safely updated to servers. Further, you can create debit notes for your customers and share them with them.
Receivables and Payables:
Vyapar app also helps you to segregate the accounts receivables and payables. The free debit note format maker app lets you stay on top of your finances and quickly determine the amount of money you have to "receive" or "pay" to someone. Moreover, Vyapar also helps you to identify the defaulters who have delayed your payments.
Vyapar software users can keep all the transaction details safe and secure and issue debit and credit notes seamlessly. Vyapar helps to save time by sending payment reminders to all your customers using the current payment reminder feature.
Online service Catalogue:
Here Vyapar software/app helps you to set up your beautiful products/services catalog for your customers, and it means helping you to receive online orders from your customers. It gives you more business through online business.
Vyapar also lets you list all items' details and help your customers place orders online. So, your customers do not have to reach out to your store, and you can deliver the items to their doorstep for convenience.
Frequently Asked Questions
How do I create a debit note format in word using the Vyapar app?
Yes, you can make a debit note using the Vyapar app. Vyapar app provides free access to the debit note formats for all businesses. The free format can help you to save time and effort in creating professional credit note formats.
How do you do credit and debit format in word?
Using word formats for debit and credit notes by Vyapar, you can perform debit and credit. It will help you manage the invoice changes professionally and keep track of them in one place.
How do debit notes affect the supplier's tax liability?
Issuing a debit note further increases the tax liability. As far as tax payments and tax returns are concerned, a debit note is treated the same as a tax invoice.
When should the details on debit notes be provided?
The details of a debit note are generally declared by the supplier while filing returns for a month it was issued, either by September after the financial year in which the transaction took place or by the annual return file date, which comes first.
There is no deadline for issuing the debit note, but once it is issued, the supplier must declare it in their respective monthly returns no later than the following month.
Do debit records need to be maintained?
All data and records related to the debit note must be preserved. They must be kept accessible for both digital and physical use until their expiry. It is 72 months from the date of providing the relevant annual returns.
When is the debit note not eligible for the input tax credit?
A debit note is not eligible for input tax credits in the following circumstances;
- Any incorrect refunds, short-paid taxes, unpaid taxes, fraudulent ITC utilization, intentional provision of fake details, or omission of dates. (SECTION 74)
- When penalties have been levied on goods and taxes. (SECTION 130)
- When the goods and vehicles are seized at transit points. (SECTION 129)