How to Prepare Debit Note in Tally .ERP 9 with GST?

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Debit note is a document informing the seller by the purchaser that he is debiting seller account in his books of accounts due to some reasons.In this guide you will learn how to prepare debit note in Tally erp 9.

Debit note used for purchase return of goods with GST

For example Buyer is returning some goods to the seller Due to damage or some other reason .As far as the buyer is concerned it is a purchase return.In Such a situation the buyer shall prepare a debit note with the amount of returning goods along with GST and sent to the seller. This means that the amount debited should be given back to the buyer or in other words the amount debited in seller’s books shall be adjusted in the ledger account of the buyer. The buyer will make payment only after deducting such amount.

Debit Note also Used When

  1. Any expense met by us on behalf of any parties (sundry debtors and sundry creditors).
  2. When there is a price difference in invoice.
  3. DN issues In case of bulk purchase schemes, normally seller raise scheme for bulk purchase in a particular time frame. If the buyer achieve such target, A special rate will be allowable. In such case buyer will issue a debit note debiting supplier account in return of a credit note by seller.
  4. When Discount received from seller.
  5. You can issue a debit note to a Sundry debtors or sundry creditors where there is a situation that the party owes some amounts to us.

Example of Debit Note:


On 01-06-2016 ABC Ltd a book dealer purchased 1000 books from Alpha Publishers as per Bill No Ap/205 . Total cost of book is 150000.00 . All the books is delivered to ABC Ltd and stored in godown. After a week ABC Ltd understood that some books were no demand in the market at all. ABC Ltd has figured out such book say 250 books worth Rs 40000 Returned to alpha publishers on 01-07-2016 .This is a pure case of purchase return. ABC Ltd has to prepare a Debit not to Alpha publishers and send along with books returned showing that Rs 40000 has deducted from account and balance amount payable is only Rs 110000 .In turn Alpha Publishers has to prepare a credit not that they have reduced the amount from Abc Ltd account.

This documentation work will help tallied or reconciled seller and purchaser account as well as stock register.

The Journal Entry in the books of ABC Ltd

On Purchase of 1000 books

01-06-2016Purchase A/c …………..Dr150000
To, Alpha Publishers150000
Being 1000 books purchased on credit as per bill no Ap/205

On Return of 250 books

01-07-2016Alpha Publishers A/c …….Dr40000.00
To; Purchase Return A/c40000.00
Being 250 Nos of books returnd

Situations where debit note raised other than purchase return.

ABC Ltd has a Supplier Called Trend Mart Who sells Grocery to them. On 1-06-2016 ABC Ltd Bought 10 bags of Sugar @ 2000 /Bag. Total Invoice Amount 20000, from Trend Mart. During the transit of sugar, 2 bags got damaged and becomes unusable .Trend mart is responsible for delivery. Hence ABC Ltd Informed Trend Mart that two bags were damaged and becomes unusable. And no return was made as there was nothing to send back.

The Above situation cannot be treated as a purchase return as nothing was returning. Instead Trend Mart agreed to compensate the amount of 2 bags as compensation. In such case ABC Ltd raises a Debit note showing the reason. And in turn Trend marts prepare a credit note for 2 bags x 2000= 4000.

The Journal Entry for the above transactions in ABC Ltd Books of Account.

When Purchasing 10 Bags of Sugar

01-06-2016Purchase A/c ……….Dr 20000
To; Trend Mart ……Cr20000
Being the cost of 10 bags sugar @ 2000/bag

The Purchase bill is not revising and Trend mart is Compensating the amount ABC Ltd accounts as follows.

02-06-2016Loss on Damage A/c...Dr4000.00
To; Purchase A/c4000.00
Being damaged goods written off as expense.

Now the DEBIT NOTE Entry, ABC Ltd want to reimburse the loss from Trend mart.

02-07-2016Trend Mart………..Dr4000.00
To, Loss on Damage A/c4000.00
Being the cost of two bag sugar damaged and agreed to compensate the amount

How to activate Debit Note in Tally ERP 9

You can Activate DN from any one of the following two Screens.

F11 Features>Accounting Features

Debit note activation from F11 Features

  • Use debit and credit notes: Yes
  • Also enable record debit notes in invoice mode

You can activate same options in

F11 Features>Accounting Features

Ledgers required

You need the following ledger for entering transactions

  • Supplier Ledger or Sundry creditors ledger to whom we are returning the goods. In our first case Alpha Publishers
  • Purchase Return Ledger,Purchase return should be accounted separately in a ledger

How to enter Debit note in Tally ERP 9

Now Go to Gateway of Tally> Accounting Vouchers

On the right hand side there is a button Debit Note or press a shortcut key Ctrl+ F9

Debit note button

Now let’s enter the DN with stock item in the first example given above.

Returned 250 Nos book

To Activate Invoice mode and stock item you have to click the following two buttons in the tallyItem invoice button

  • Click on item Invoice button
  • Click on As Invoice Button
  • Change the date as 01-07-2016
  • Original Invoice No : Enter the purchase bill invoice number here
  • Date: The date of purchase invoice
  • Party A/c name: The name of party.
  • Purchase Ledger: Select the Purchase Return Ledger we have created earlier.
  • Name of item: The items you are returning to the supplier Alpha Publishers.
  • Enter Quantity, Rate and the amount will be calculated automatically. Enter narrations and save the screen.

The debit note will look like below image.

Debit note Invoice mode

Press enter and save the voucher.

Debit Note entry in tally with GST for Purchase return.

Let’s consider an example sale with GST tax.

On 01-06-2018 ABC Ltd Purchased  50 No Dell PC 242 @ 23000 /Nos  + CGST & SGST  Rs 103500.00 each and  Total Invoice amount 1357000. Invoice No CP 2503/2018-19

On 01-07-2018 ABC Ltd Returned 5 Nos of Dell PC 242 Prepare a debit note.

To enter this Debit note With GST transaction in tally

  1. Go to Accounting Voucher >  Ctrl+ F9 Debit note
  2. Choose the date of return of goods by pressing F2 Date.
  3. Select Party ledger , From whom you bought the item
  4. Select the stock item returning to the supplier
  5. Enter the quantity , and rate of retuning goods.
  6. Select CGST & SGST Ledgers if it is an interstate purchase return you must choose IGST Ledger.

Debit note for gst purchase return

How to print GST debit note and Format in tally

To print a Debit note with GST , Just click Alt +P or print button at the top of a debit note voucher. You will get a print configuration screen. Click on Print ,You will gst debit note printed.

Debit note print format

Debit note in GSTR -2

If you check the GSTR- 2 Report, you will find the value got updated in GSTR-2 of tally erp 9. This will got reduced in the Total ITC Availed. Because at the time of purchase entry,we have recorded the CGST & SGST for availing input tax credit. But When you are returning a part of those goods reduces the Input tax credit as well. You can view this in the below GSTR- 2 Images.

GSTR-2 For debit note entry

How to Enter Debit Note without Inventory or stock

In our second case, we are not entering stock item,as we are adjusting that stock in loss on Damage A/c. To enter as Accounting Invoice ,click on Accounting Invoice Button provided at the right button panel.

Accounting Voucher

  • Enter Original invoice Number, original invoice date.
  • Under particulars Enter debit the party,here Trend mart and credit Loss on damage /ac
  • Enter amount in both the debit and credit field

Debit not accounting voucher

Press Enter and save.

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