Debit Note Template
Charges a supplier back for returns, shortages or an overcharge.
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| Debit note no. | [number] |
| To | [supplier] — [supplier address] |
| Against invoice | [invoice no.] |
| Date | October 14, 2026 |
We are debiting your account in respect of [reason]. Please issue a credit note for the amount below.
| Description | Qty | Amount |
|---|---|---|
| [add one line per item] | ||
| Subtotal | $ 0.00 | |
| Total debited | $ 0.00 | |
What is a Debit Note?
A debit note is a buyer's formal notice that they are reducing what they will pay a supplier — for goods returned, a short delivery, or a price charged above what was agreed. It matters because deducting money from a payment without a document leaves the supplier's ledger showing you as still owing it. The debit note gives them something to match, investigate and credit against, instead of an unexplained shortfall to chase.
Purchasing and accounts payable teams raise debit notes constantly: retailers against distributors, manufacturers against component suppliers, importers against shippers. The usual triggers are a short shipment, damaged or rejected stock, the wrong item delivered, freight charged that the supplier agreed to absorb, or an invoice priced above the purchase order. Confusingly, the same term is used the other way round in some trades and under some tax systems, where a seller issues a debit note to increase a previously invoiced amount after an upward price revision.
Whether the note has any tax effect depends on where you are. Under Indian GST it is the supplier's debit note that raises the taxable value and must be reported; a buyer-raised debit note has no independent effect, and the supplier still has to issue a credit note for the reduction. In the UK and EU, VAT adjustments run through the supplier's credit note under the applicable VAT rules. Australia uses adjustment notes, and US sales tax varies by state. Check with your revenue authority before assuming the note alone adjusts tax.
A debit note does not create a right to withhold payment. Whether you can set an amount off against an invoice depends on your contract with the supplier and on local law, and deducting without that right can put you in breach. It is not a rejection note, an inspection report or a formal claim under the contract — those are separate documents with their own deadlines. And it does not oblige the supplier to accept the claim; they can dispute every line of it.
What to put in a Debit Note
These are the details this template asks for. Anything left blank is marked in red on the preview so you can see what is still missing.
| Field | What goes in it |
|---|---|
| Business name | For example: Barton Supply Co. |
| Your address | For example: Unit 7, Barton Road, Columbus, OH 43212 |
| Supplier | For example: Northgate Timber Inc. |
| Supplier address | For example: Unit 3, Foster Avenue, Cleveland, OH 44113 |
| Debit note no. | For example: DN-2026-0044 |
| Against invoice no. | For example: INV-2026-1187 |
| Reason | Free text |
| Tax rate % optional | For example: 20 |
| Lines debited | One per line: Description | Qty | Amount |
How to write a Debit Note
Identify the invoice and the delivery
Quote the supplier invoice number and date, the purchase order number, and the goods receipt or delivery note reference. Suppliers match on those three. A debit note that names only the amount and a month forces their team to go looking, which is the point at which most claims stall for weeks in someone's tray.
Quantify the claim line by line
Set out each item: description, part number, quantity claimed, unit price and the extended amount. Add them to a total. One line reading 'shortages and damages, ₹42,300' invites a counter-argument about every part of it, whereas eleven priced lines can be accepted or disputed individually and usually are, which speeds settlement.
State the reason and name the evidence
Give the reason per line and the document that supports it — inspection report number, goods receipt note, photographs, weighbridge ticket, carrier's damage record. 'Short delivered 40 of 200 units, GRN 8812, carrier POD signed short' is checkable. 'Quality issue' is an opinion, and suppliers reject opinions as a matter of routine.
Handle tax the way the invoice did
If the original invoice carried VAT or GST, show the claim net, the tax, and the gross using the same rate, so the two documents reconcile line for line. Do not invent a rate or apply a current rate to an older supply. Where the tax adjustment must come from the supplier, say so on the note.
Ask for a credit note in return
Close by requesting a credit note against the named invoice, and state what you will actually pay and when. 'We will settle invoice 3391 at £8,420 on 30 April; please issue a credit note for £1,180' leaves no room for the supplier to allocate your payment somewhere unexpected or to treat the balance as overdue.
Common mistakes
- Deducting the amount from a payment without sending the debit note first leaves the supplier allocating your money against the wrong invoices and treating the account as in arrears.
- Failing to reference the goods receipt or inspection record gives the supplier an easy reason to reject the claim, and the dispute then runs for months.
- Applying your own tax treatment rather than mirroring the invoice produces figures that will never reconcile against the supplier's records.
- Raising the note against the wrong invoice number puts the eventual credit on a line that was already settled, creating a second reconciliation problem.
- Missing the notification window for defects or shortages set out in the supply contract can leave a perfectly valid claim time-barred.
Frequently asked questions
What is the difference between a debit note and a credit note?
A debit note reduces what the issuer will pay or increases what the recipient owes; a credit note reduces what the recipient owes the issuer. In practice a buyer raises a debit note to open a claim, and the supplier responds with a credit note that formally adjusts the invoice. The two documents usually come in that order and reference each other.
Who issues a debit note, the buyer or the seller?
Both do, in different situations. A buyer raises one to claim back value for returns, shortages or an overcharge. A seller raises one to increase a previously invoiced amount after a price revision or an undercharge. Which meaning applies in your trade matters for the tax treatment, so be explicit on the document about which way the money is moving.
Is a debit note the same as an invoice?
No. An invoice records a supply you have made and asks for payment for it. A debit note adjusts a transaction that has already been invoiced by someone else. Some accounting systems post them into the same ledger, which is where the confusion comes from, but they answer different questions and should carry their own number series.
Can I deduct a debit note from my next payment?
Only if your contract with the supplier allows set-off, or local law gives you the right. Many supply agreements expressly exclude it. Deducting without that right can put you in breach even when the underlying claim is sound. Check the payment and set-off clauses in your agreement, and where the sum is large, take advice before withholding.
Does a debit note need VAT or GST on it?
It depends on the system you are in and on who issued it. In several countries only the supplier's document adjusts the tax, so a buyer's debit note shows the tax for information and the supplier's credit note does the work. Confirm the position with your revenue authority or accountant rather than adjusting your own return on the strength of a note you raised.
This page explains general practice and is not legal advice. Requirements differ between countries and, in some cases, between states — check what applies where the document will be used.