Debit Notes (Purchase Returns)

A Debit Note is raised when you return goods to a vendor and want to reduce the amount you owe them. It is also called a Purchase Return.

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When to Use a Debit Note

• You received damaged or incorrect goods and are returning them.
• A vendor agreed to reduce the bill amount after it was raised.
• You need to partially cancel a Purchase Bill.

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Creating a Debit Note

1. Go to Transactions > Purchase Returns.
2. Click New Purchase Return.
3. Select the Vendor.
4. Add the Items being returned with quantities and the original cost price at which they were purchased.
5. Confirm the Tax details — input tax credit is reversed automatically.
6. Add a Notes field to record the reason for the return.
7. Click Save. The Debit Note is now available to apply to open bills.

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Applying a Debit Note to a Bill

1. Open the Debit Note.
2. Click Apply to Bill.
3. Select the bill(s) you want to reduce.
4. Enter the amount to apply.
5. Click Save. The bill outstanding amount is reduced accordingly.

Alternatively, apply from the Bill side:

1. Open a Purchase Bill.
2. Click Apply Debit.
3. Select the open Debit Note.

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Debit Note Status

Status	Meaning
Open	Debit note created, not yet applied
Applied	Fully applied to one or more bills
Partially Applied	Partial amount applied, balance remaining

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Impact on GST

Debit Notes reduce your Input Tax Credit (ITC) claim. They appear in your GSTR-2/Inward Supplies report for the period they are raised.