Debit and Credit Note in Accounts

Following my article on learning on basic of accounting, today we will learn what is debit note and what is a credit note

and how the same are dealt with in accounts ?

debit noteImage Credit


In accounts there were many instances when an Organization receive debit note or it has to issue a debit note to its suppliers, customers, employees, third party and so on.

when you receives a debit note, from a third party, you have to credit the account of the issuer of the note and debit the related expenses /item account.

suppose you have purchased  an item at  a rate of Rs.100 however by mistake your supplier had billed you at  a rate of Rs.95, then your supplier may issue a debit note for balance of Rs. 5 plus vat and other applicable duty. In such a case, you have to debit respective purchase and duty amount as narrated in the debit note and credit the supplier account.

Similarly if you have issued a debit note to your customer, you have to debit your customer’s account and credit the related account.

I am highlighting some major circumstances under which you may issue  or receive a Debit Note

1) Rate difference in sales/purchase invoice

2) Difference between billed and actual quantity of the invoice

3) Interest on late payment to and from suppliers/customers

4)Recovery interest or any amount from employees due to loss or damage to company’s     assets or any other cause.

5)Wrong credit or debit entry in the books of account of either party.

6) Quality difference

6) Any other circumstances which requires to issue a debit note


In the same way, as explained above, circumstances may arise when an organisation may require to issue a credit note or receive a credit note.

In case of issue of Credit note to a third party, you have to credit supplier’s account and debit the related expenses head account.

Let’s assume, you have agreed to pay a purchase invoice within 1 month time to your suppliers however, you couldn’t manage to pay and your supplier agreed for a delayed payment at an interest rate of @2. p.m. for the same

Now, you have to issue a credit note to your supplier debiting interest account and crediting his account with the amount of interest.

One thing is very important to note, that you can not issue a debit or credit note to any government department, bank etc. It is applicable only for private organisation.

An employee can not issue a debit or credit note but you can do so.

In tally, Debit and credit notes are managed through Journal voucher entry.

I will post the same by writing an another article.

65 thoughts on “Debit and Credit Note in Accounts

  1. shakuntala aswaney says:

    thanks to your step by step TDS in Tally ERP now I can print the challan for
    pymt of TDS in Bank. Now please guide me to do VAT Returns in Tally ERP and also remote login i.e if I m at home then how do I view tally ERP on my Laptop as I have loaded it on my laptop but in the office as we have wirefree Im connected to the server but when Im at my Resi 20 kms away how do I view my Tally ERP ?

    • OK Soon I will write about remote access to tally. you can view your data anywhere from the world.the only condition is both the computer must be connected through internet.
      For vat returns please refer my post about vat and excise in tally. if need more information please revert back.

  2. Kavita Mosamkar says:

    Thanks a lot to Add your article of Credit & Debit note. Its a most of Important Notes in Tally.. Even im also confussed wheh we have to issue CR & DR ? But really you explain very very well. Thanks a lot. ..

  3. jordaar…………wat an example………..thanx a lot………..!!

  4. I cant make debit note in tally erp 9 what to do ?
    is asking “”” Adjust Classification “others” doesnot exist!””” What is a solution ???please help //

  5. Thanks for your valuable information about accounts(debit and credit note)
    You have explained clearly and it is very useful for me thanks once again

  6. hello sir,
    i need your help in optional voucher
    in journal entry , by mistake one voucher was enter in optional voucher,then few day after i saw the partys account, there are no transaction in his account i know the bill was enter becasue it is new party and its ledger is created but entry is not saw in is the any configure are in tally for saw optional voucher.pls send feedback.

    few days ago my question for service tax is solved by you successfully.

    • Vijay,
      Optional vouchers can be seen by Display Exception reports
      Else you can also view it from Display statement of accounts, statsticks
      Next time, when you ask here, please do not forget to mention your Tally serial number else the query will not be attended

  7. Thanks a lot for help & next time i remember to mention tally serial number.

  8. gopalkrishnan says:


    How to print Debit Note Voucher in bill format.

  9. suresh kumar says:

    Thanks for you to do our help in tally . Please always doing our help because We are a student of tally and gouide us when we are in wrong point in tally.

  10. Sir,
    Can u please help me with the credit note.
    In tally i have recored the credit note ( at the sale price). But the closing rate of the item is showing differnce in the rate after the credit note. The rate is going high. we are currently maintaining average cost method in tally.

    • Hi….
      I’m Magi Student of CA Academy
      R u need credit note Information just see…

      A credit note is a monetary instrument issued by a seller that allows a buyer to purchase any item or service from that seller on a future date.

      Credit notes may be issued by a seller as a goodwill gesture to a buyer who wishes to return previously purchased merchandize (instead of cash repayment) in circumstances where the original sales agreement did not include an explicit refund policy for returned items. In such circumstances, a credit note of value equal to the price of the returned item is usually issued allowing the buyer to exchange his purchase for other items available with the seller.

  11. Hello sir,

    I need of some Information on Tally

  12. hello sir
    i want Information about cash sales. which voucher is used

  13. sir, where to find a complete knowledge of tally 9. so that no queries left.

  14. thanks dear to solve my problem

  15. Mirza Irfan Baing says:

    I want to know How to take out Trial Balance With Head of Accoutn With Lines

    Like This
    1)Cash A/c
    2)Bank A/c
    3)Expenses A/c

    Plz Inform Me…

  16. Syd Masroor Rizvi says:

    This is Syd Masroor Rizvi. I am student and want to learn Tally, I need some notes of Tally .
    Pls reply as soon as Possible.


  17. sekhar deb roy says:

    respected sir,
    I am sekhar from W.B. right naw i am working in pvt. ltd. company for jr. A/c , i want to need some important notes of tally pls repl as soon as possible.

  18. Dear sir,
    I am working in construction company as Accountant.
    I am using Tally9.
    i have one doubt we will plan to anothr branch in MEP division what is the process of entries in head office & branch account entries uner ledger creations also plz give me sir reply.

    • Priyanaka,

      All Accounting entries depends on the nature of transactions. Now a software can’t do a magic that can offer you ready made entries.
      You have to study the relationship of branches and HO. Otherwise, I am pretty sure in B. Com Accounting books there are plenty of examples of Branches/HO u have to use the same principles here in real life

  19. vikash varnwal says:

    thanks for this.
    but i want to learn tally on our mobile . i want to learn tally and the entry on the tally software so plaese help to me .

  20. We received credit note from our customer for purchase of goods from Austria, kindly intemate me how to pass entry in tally erp 9.



  21. I cant make debit note in tally erp 9 what to do ?
    is asking Adjust Classification “others” doesnot exist! What is a solution ???please help

  22. Rajesh M. Jawade says:

    I cant make debit note or credit note entry in tally erp 9 what to do ?
    is asking Adjust Classification “others” doesnot exist! What is a solution ???please help

  23. Rajesh M. Jawade says:

    Tally erp 9.1.52 – Sr.No.77xxxxxxx
    Sorry for sending problem without
    I can’t make debit note or credit note entry in tally erp 9 what to do ?
    Tally 9 is asking Adjust Classification “others” does not exist! What is a solution ?
    please help us & send reply.

    • Rajesh,
      have you enabled Debit and Credit note option in your Tally.erp 9 ?
      if not then first of all go to F11, Inventory option and under invoicing set yes to debit and credit note
      then save the form

      regarding classification “others” can you explain me where are you facing the problem ?
      if you can send a screen shot of your problem with more specific details I will be able to help you with a precious solution

      • Sir , i am using Tally.ERP.9 Release 1.1
        while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
        in F11 i have already given yes for debit notes and credit notes.
        Thank you sir

  24. dear,

    what is type of company

  25. Rajesh M. Jawade says:

    Dear Sir,
    Thanks for your quick reply.
    1.We have already taken yes option in F11 for D/Note & Credit Note.
    2.At the time of entry complete then the message shown by software as per given details.
    Adjustment classification does not exit.
    How to send a screen shot copy to you?
    please send your e-mail address or other option.
    please guide us.

    • Hello Rajesh,
      I had sent you a personal mail to your mail id. you can respond me to that mail.
      Else, you can also fill out our Contact us page and can attach your screen shots there!
      Its safe and confidential.



  27. i have some doubt in tally for example some of the members are giving cash for interest in with group they should be for example salary means indirect expenses

  28. Output cst, input cst, vat, custom duty, cess etc all comes under wht account in tally.
    Whether it comes under Duties& Taxes or Sales a/c or Purchase a/c
    Plz reply

  29. I have issue the Debit note of Rs. 13500/- they have deduct the TDS how i can enter the entry in TALLY 9

  30. Dear sir,

    Recently,we gave 13000/-discount to customer against invoice value.and i make a credit note and sent to customer but in tally how can i enter and which account weather journal / credit account.Pleas reply me

  31. chelladhadiya says:

    i made one debit note to my supplier, then they raised credit note for that, how can i pass that entry in tally.

  32. Ravishankar kumar says:

    iam working as an account. ihave one small doubt in tally 9

  33. Ravishankar kumar says:

    howwe can calculate project cost in tally 9

  34. Hello Sir,
    If I purchase the cement on Credit base, directly from cement co. Pls tell what entry’s come? pls tell step by step. And pls send if u have any samples related to retail cement business. thakyou



  35. HITESH PATEL says:

    Dear Sir,
    In Tally erp-9 series A release 2.0 eddition gold ultimation
    Problem :- I can’t enter Details of Transport, L.R. No. & destination In Creation of sales return C.N. but in the sales return C.N. print priveiw is shown all of details that’s i was said above.(Details of Transport, L.R. No. & destination)
    Plese give me solution…urgenly. ( Thank you for your upcoming answer)

  36. Thank u Sir – I got Information About Dr & Cr

  37. Onitolo K.A says:

    sir, i need a detailed note on tally. pls, reply as early as possible.

  38. hi sir i want a all journal entry and the entrys of tally 9

  39. DEAR SIR


  40. Hello sir,

    Myself amit, i want to know how can i create retail invoice in tally

  41. Omprakash Ankam says:

    Why we update tax number on invoice ? why menditory to update it ? can you please guide me on compliance ?

    is it fine, if I sent invoice without tax number to buyer and sent it later via email or call?


  42. Thanks sir, i got a clarification by your explaination. your explaination will be useful for me in my organaisation.

  43. Dear Sir i was joined a manufacturing company from service sector handling total Accounts Receivable Process so, which kind of care i have to be taken and where to pay a attention Please replay me we are using Tally 9 and shifting in new integrated business solution soft as per our requirement.


  44. Naresh Singh Bisht says:

    Dear Sir,
    m Naresh,
    i want to know how can i pay on line TDS, SERVICES TAX AND VAT, on ERP9

  45. dear sir, i am using tally erp9 and when going to credit note in invoice format it works up to accept y / n. when we press yes it says adjustment classification “others” does not exist.

    in sales invoice before narration it asks for “show statutory details”
    I do not want them. please do help me

  46. Hi,

    How to pass the entry in tally for the same amount debit to party A/c and after two days same amount credited to same A/C..Please help me


  47. Tinku sharma says:

    Sir please tell me what is the diff between tally 9.1 and previous versions

  48. wonderful sir, it is too good n i apply it in my work thanks so much,
    but one more help i need sir ..when ever i use tally or any accounting software i feel so much confuse what i hve to fill like divion …….. unitcode….. sub ledger ……… yes /no cost centre so what should i do?

  49. Sir , i am using Tally.ERP.9 Release 1.1
    while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
    in F11 i have already given yes for debit notes and credit notes.
    Thank you sir

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