i know when we return goods to our suppliers we have to issue debit note because we debit his account in our books but why their is need to issue debit note to supplier?? what is the purpose behind it??
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Debit note
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The below will help you understanding the debit note concept
Debit note is document which shows that the account of receiver of the debit note has been debited by the issuing party with the amount mentioned therein and the reason for such debit also has to be given in debit note.
Debit notes are issued due to following reasons:-
1. When the material is returned by the purchaser to the supplier then the debit note is issued by the purchaser to the supplier. This is done in order to cancel the invioce issued by Supplier .
2. Debit note can be issued by the firm for the transactions not relating to purchase return. For example:- the interest charged by business firm for late payments. This is done as this is an ancilary expense and not related to Purchases
3. Debit note can be issued in response to credit note received by the business firm. - This is to acknowledge/confirm the credit note.
4. Debit note can be issued to the customer or supplier also if there is a mistake in sales invoice or purchase invoice and in turn the supplier can send the credit note confirming the same.
5. Some time for certain adjustments or transactions for which bill can note be issued in that case debit not is issued by the firm. issued.
can one someone give me the format of debit note for services rendered by the parent company to the subsidiary company like technical & marketing support, etc.,
I believe your doubt is cleared by the first respondent....and also Debit Note and Credit Notes are legal documents in India having sales tax implications......
Hi, jishnu,
can you tell me about the sales tax implications over debit note and credit note,
Hi Rohit....I do not know which state in India you reside in...but as per the Kerala Value Added Tax.....if you sell something as a registered dealer but the goods are subsequently returned...you could reverse the sales tax you paid earlier....with the help of an accompanying credit note.....which is in turn..a document issued against...the buying party's debit note..............where the buyer should reverse the input claim they made earlier and is liable to remit tax.....I think the situation is clear....
These are the basic issues in VAT and it does not affect which state you reside in...actually....as VAT is Concurrent Listed....ofcourse some changes are there among different states' VAT...but these are basic concepts....
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