When a supplier reduces a previous invoice amount, they issue a credit note, which reduces your eligible Input Tax Credit (ITC). If they increase the amount, they issue a debit note, which gives you more ITC. Many accountants struggle during the monthly 14th-to-20th crunch because ERP systems and the GST portal handle these negative and positive values differently, leading to reconciliation errors.
Credit notes in GSTR-2B
A credit note is issued by the supplier to reverse a part or full value of an invoice. Under GST rules, when a supplier uploads a credit note, you must reverse the corresponding ITC.
The GST portal groups these documents in a separate section. According to the GSTN manual, the downloaded GSTR-2B Excel file contains specific sheets including the CDNR (Credit/Debit Notes Registered) sheet where all such notes appear.
Missing the net calculation: The GST portal auto-populates Table 4(A)(5) "All other ITC" in GSTR-3B on a net basis directly from the system generated Form GSTR-2B. This means the credit note tax amount is already subtracted from your eligible invoice ITC. If you manually reverse it again in Table 4(B), you will lose that ITC twice.
How to handle credit note signs and original invoices
- Find the document — Open your downloaded GSTR-2B Excel file and go to the CDNR sheet.
- Check the sign — In GSTR-2B, a credit note acts as a negative document that reduces ITC. In many ERPs (like Tally), a debit note to a supplier (purchase return) is entered as a positive number in a separate register. You must ensure you are matching opposites correctly.
- Match to the original invoice — A credit note should be matched against the original purchase invoice to ensure you previously claimed the ITC.
Note: With the new Invoice Management System (IMS), you can take specific actions on credit notes. We have covered the detailed rules for these actions in our guides on IMS pending rules and IMS credit note handling.
Debit notes in GSTR-2B
A debit note is issued by a supplier when the original invoice was under-billed. For a recipient, a debit note acts exactly like a new invoice—it increases your eligible ITC.
Debit notes also appear in the CDNR sheet of the GSTR-2B file. Unlike credit notes, a debit note adds to your net ITC available in Table 4(A)(5) of GSTR-3B.
Linking to the original invoice: Just like credit notes, debit notes must be reconciled against the original purchase invoice to ensure the supplier hasn't duplicated a charge or billed the wrong GSTIN.
Worked example: calculating net ITC
Imagine you have one purchase invoice and one credit note from the same supplier in the same month.
| Document type | Invoice/Note No. | Tax amount | GSTR-2B sheet |
|---|---|---|---|
| Tax Invoice | INV-0142 | ₹18,000 | B2B |
| Credit Note | CN-008 | -₹4,000 | CDNR |
| Net ITC available | ₹14,000 | Auto-populated in 3B 4(A)(5) |
Frequently asked questions
Where do credit notes appear in GSTR-2B?
Both credit notes and debit notes uploaded by your suppliers appear in the CDNR (Credit/Debit Notes Registered) sheet of the GSTR-2B Excel file downloaded from the GST portal.
Are credit notes auto-populated in GSTR-3B?
Yes, GSTR-3B Table 4(A)(5) for 'All other ITC' is auto-populated on a net basis from the system generated Form GSTR-2B, meaning credit note values are automatically deducted from your eligible ITC.
Reconcile CDNR and B2B automatically
Our tool reads your purchase register and the GSTR-2B Excel file directly in your browser. It automatically nets off credit notes against their original invoices, handles the positive/negative sign flips from your ERP, and shows you the exact mismatch in rupees.
your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.
Last checked: 1 October 2026. Sources: GSTN GSTR-3B User Manual, GSTN GSTR-2B FAQs.