Credit note rules permit suppliers to adjust tax liability for overstated invoices or returned/deficient supplies, subject to conditions.

Section 34 allows registered suppliers to issue credit notes when an invoice overstates tax or value, goods are returned, or supplies are deficient, and requires declaration of such credit notes in the return for the month of issue but not later than the September following the financial year or on furnishing the annual return, with tax adjusted as prescribed and a proviso preventing reduction of output tax if tax incidence has been passed on. It also requires issuance and monthly declaration of debit notes where invoices understate tax or value, and defines a debit note to include a supplementary invoice.

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