What Is a Debit Note?

When to issue a debit note
How a debit note shows in the accounts

A debit note is a document a seller issues to increase what a customer owes on an invoice that has already been issued, for example because the invoice undercharged or the price went up by agreement after the sale. It refers to the original invoice and states the extra amount due, so the increase has its own record instead of a changed invoice. UK VAT guidance and India's GST law set rules for debit notes, and the rules differ by country.

Billed publishes this page. The accounts receivable definition is quoted from the open textbook OpenStax Principles of Accounting, Volume 1, and the UK and India rules from official government pages, all opened on October 29, 2026. Tax rules differ by country, so ask your accountant how debit notes affect your tax.

When to issue a debit note

An undercharge: the invoice charged too little, for example the wrong quantity or rate.
A price increase agreed on after the sale, such as a rate change the contract allows.
Extra work or costs agreed on after the invoice, such as added hours or freight whose amount wasn't known when you invoiced.

How a debit note shows in the accounts

A debit note adds to accounts receivable, which OpenStax defines as "outstanding customer debt on a credit sale" (OpenStax, chapter 9 key terms). It's the opposite of a credit memo, which reduces what the customer owes.

Debit note, credit note or new invoice?

Debit note: increases what's owed on an earlier invoice and refers to it.
Credit note: reduces what's owed on an earlier invoice and refers to it.
New invoice: bills separate work that isn't tied to an earlier invoice.

What to put on a debit note

its own number and the date;
your business details and the customer's;
the number and date of the original invoice;
what is added and why: the items, quantities and amounts;
the extra amount due and any tax on it;
the due date and how to pay.

Debit notes in the UK (VAT)

In the UK, HMRC's VAT guide (VAT Notice 700) (last updated June 25, 2026) says that "To be valid for VAT purposes a debit note must" "reflect a genuine mistake or undercharge or an agreed increase in the value of the supply, and be issued within 14 days of the increase being agreed between the supplier and the customer". The details it lists include the "identifying number and date of issue of the VAT invoice or invoices relating to the supply for which there is an increase in price" and "the amount of the increase in price, excluding VAT". It also says: "The rate of VAT to be used for a credit or debit note is the one which was in force at the time of the tax point of the original supply."

These rules apply to UK VAT. Ask your accountant about the rules where you're registered.

Debit notes in India (GST)

In India, section 34 of the Central Goods and Services Tax Act, 2017 (CBIC) covers debit notes where "the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply". In that case, "the registered person, who has supplied such goods or services or both, shall issue to the recipient" debit notes. The Act also says the term "shall include a supplementary invoice". These rules apply to Indian GST.

Worked example (sample figures)

A sample consultant, invented for this example, agreed on 46 hours of work at $85.00 an hour, but the invoice billed only 40 hours.

Original invoice: 40 × $85.00 = $3,400.00
Debit note for the missing hours: 6 × $85.00 = $510.00
Total owed: $3,400.00 + $510.00 = $3,910.00

If the customer has already paid the original invoice, they now owe the $510.00 on the debit note. This example leaves out sales tax; ask your accountant how a debit note affects the tax you report.

Keep debit notes under control

Number them in their own sequence, so each one can be traced.
Agree on the increase with the customer before you send it, and keep a record of what was agreed.
Refer to the original invoice on each one, so the extra amount can be matched.
Record the reason, such as an undercharge or an agreed price change.

Where Billed fits

Billed's invoice software, features, accept payments, home, pricing and estimating software pages don't describe debit notes, debit memos or supplementary invoices.

When this guide isn't for you

If you're registered for VAT or GST, or you sell across borders, the rules for debit notes differ by country. If you receive a debit note, check which invoice it refers to and why before you pay it, and ask your accountant about the rules where you're registered.

Frequently Asked Questions

What is a debit note?

A document a seller issues to increase what a customer owes on an invoice already issued, for example after an undercharge or an agreed price increase. It refers to the original invoice and states the extra amount due.

How is a debit note different from a credit note?

A debit note increases what the customer owes on an earlier invoice. A credit note reduces it.

When should I issue a debit note instead of a new invoice?

Issue a debit note when the extra amount belongs to an earlier invoice, such as an undercharge on it. Issue a new invoice for separate work that isn't tied to an earlier invoice.

What should a debit note include?

Its own number and date, both parties' details, the number and date of the original invoice, what is added and why, the extra amount and any tax, and when and how to pay.

How does a debit note affect the amount owed?

It increases it by the amount on the debit note. In this page's sample, a $3,400.00 invoice with a $510.00 debit note for missing hours brings the total owed to $3,910.00.

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What Is a Debit Note? Adjustments, Corrections, and AR