Tds on debit note/credit note

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2013 Dear All,

any one can suggest please..

we have raised invoice against debtors of Rs. 500000/-, and they already provided service as manpower supply which costs Rs. 300000/-,

here my doubt;

what is the procedure for adjustment, can they raise the Debit Note on us or to raise the inovice against manpower supply?

please suggest me

Querist : Anonymous

Querist : Anonymous (Querist)

09 January 2013 Need to Deduct the tds on Debit Note and credit notes

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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27 July 2025 On **TDS and Debit/Credit Notes**:

* When a **Debit Note** or **Credit Note** is issued relating to a transaction on which TDS was originally deducted, the adjustment should also reflect TDS implications.

* **If the Debit Note increases the taxable amount** (like additional charges), then TDS should be deducted on the increased amount as per applicable section.

* **If the Credit Note reduces the taxable amount** (like a discount or returned service), then TDS adjustment needs to be made accordingly — i.e., TDS on the reduced amount.

* The **party receiving the Debit/Credit Note** must deduct TDS on the net amount payable after such adjustments.

* In short: **TDS applies on the actual amount payable after considering Debit/Credit Notes**.

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**Practical approach:**

1. If you receive a Debit Note increasing your payable amount, deduct TDS on that amount and pay accordingly.
2. If you receive a Credit Note reducing your payable amount, adjust previously deducted TDS accordingly (possibly by claiming refund or adjusting future TDS).

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If you want, I can help draft the entries or letters related to this adjustment. Would you like that?

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