In the rigorous financial environment of Singapore, accuracy isn’t just a goal—it’s a regulatory requirement. While most businesses are familiar with Credit Notes for returns and refunds, the Debit Note is its essential counterpart.
A Debit Note is a formal document issued by a seller to a buyer to notify them that the amount they owe has increased. Whether due to an accidental undercharge on an original invoice or additional services rendered after billing, a debit note “debits” the customer’s account, increasing their liability to your business.
For businesses in Singapore, especially those registered for GST (Goods and Services Tax), issuing a debit note is the legally correct way to adjust tax liabilities upward without tampering with finalized historical records.
Key Takeaways
- What It Is: A document that informs a buyer their debt to the seller has increased, acting as a “supplementary invoice.”
- Common Use Cases: Undercharges, price adjustments, or late payment interest.
- GST Compliance: Mandatory for adjusting the 9% GST when the original tax invoice was too low.
- IRAS Requirements: Must include specific fields like UEN, GST registration number, and a link to the original invoice.
- Terminology: Always use a modern payment platform to track these adjustments and maintain a clean audit trail.
What is a Debit Note?
At its core, a debit note is a formal acknowledgement of a debt increase. When a Singapore-registered business issues an invoice, it creates a legal obligation for the buyer to pay. If that obligation needs to be raised—perhaps because a discount was applied in error or additional costs were incurred—the debit note “debits” the customer’s account in your books.
Accounting Logic:
- For the Seller: It increases Accounts Receivable (money owed to you).
- For the Buyer: It increases Accounts Payable (money they owe to you).
By issuing a debit note instead of creating an entirely new invoice, you maintain a clear and direct link to the original transaction, which is vital for professional bookkeeping and IRAS audits.
Benefits of Using Debit Notes for Your Business
While telling a customer they owe more money is never easy, using a formal debit note offers several professional advantages:
- Maintains Audit Integrity: It preserves the history of the original invoice while documenting the adjustment separately, which auditors prefer.
- Simplifies Reconciliation: It is easier for a customer’s finance team to match a $200 debit note to an existing $1,000 invoice than to figure out why they received two separate invoices for the same project.
- Ensures Tax Accuracy: It allows you to report additional “Output Tax” to IRAS correctly within the same or subsequent taxable period.
- Strengthens Legal Standing: A validated debit note serves as evidence of an agreed-upon price increase or additional service rendered.
When Should You Issue a Debit Note in Singapore?
A debit note is used whenever you need to increase the balance of a previously issued and finalized invoice. Common scenarios include:
- Undercharging on Original Invoice: You accidentally billed a client $1,000 for a service that should have cost $1,200.
- Price Fluctuations: In industries where raw material costs or exchange rates change after the initial order but before final settlement.
- Additional Services/Goods: The customer requested extra items or “add-ons” after the original invoice was already recorded in your accounts.
- Interest on Late Payments: If your terms allow for interest charges on overdue balances, these are typically documented via a debit note.
- Administrative or Re-billing Fees: Charging back costs for shipping, insurance, or specialized processing that were omitted from the first bill.
IRAS Requirements for Debit Notes
If your business is GST-registered, the Inland Revenue Authority of Singapore (IRAS) treats a debit note as a serious tax document. It must contain specific information to be considered valid for tax adjustments.
Mandatory Information Fields:
- The words “DEBIT NOTE” must be prominently displayed.
- Seller Details: Your registered company name, address, UEN, and GST Registration Number.
- Buyer Details: The customer’s name and address.
- Unique Identification: A serial number specific to the debit note.
- Date of Issue: The date the debit note is generated.
- Reference to Original: The number and date of the original Tax Invoice being adjusted.
- Reason for Debit: A brief explanation (e.g., “Adjustment for undercharge on unit price”).
- GST Breakdown:
- Total amount excluding GST.
- The GST rate (currently 9%).
- The specific GST amount being added.
- The total amount including GST.
Singapore Debit Note Template
To meet both professional standards and IRAS requirements, your debit note should follow this structure:
[YOUR COMPANY NAME PTE. LTD.] (UEN: 2025XXXXXA | GST Reg No: M0-XXXXXXX-X) 123 Marina Boulevard, Singapore 018982
DEBIT NOTE
DN Number: DN-2025-045
Date: 26 December 2025
Original Invoice Ref: INV-2025-800 (Dated: 15 Dec 2025)
BILL TO: [Customer Name]
[Customer Address]
| Description | Qty | Unit Price (S$) | Total Excl. GST (S$) |
| Price correction for Model X (undercharged) | 10 | 20.00 | 200.00 |
| Total Amount (Excl. GST) | 200.00 | ||
| GST at 9% | 18.00 | ||
| TOTAL DEBIT AMOUNT (Incl. GST) | 218.00 |
Reason for Debit: Correction of unit price error on original invoice.
Authorized Signature: ____________________
Did You Know?
In some B2B scenarios, a buyer might issue a Debit Note to a seller to request a reduction in debt (e.g., for damaged goods).
However, for tax purposes in Singapore, it is best practice for the seller to issue a Credit Note to officially confirm that reduction in their own records and yours.
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Conclusion: Maintaining Financial Integrity
A Debit Note is a vital accounting instrument that ensures your business is paid what it is actually owed while staying compliant with IRAS. In an era of increasing digital transparency, Singaporean businesses must treat every adjustment with the same technical rigor as their primary invoices. By ensuring every debit note is accurately referenced, validated, and recorded, you protect your cash flow and build a reputation for professional integrity.
Frequently Asked Questions (FAQs)
1. Can I just issue a second invoice instead of a debit note?
Technically you can, but it is not recommended for clean bookkeeping. A Debit Note clearly links the additional charge to the original transaction, which is much easier for your customer’s finance team (and IRAS auditors) to reconcile.
2. Is a Debit Note the same as a supplement invoice?
For most practical purposes, yes. Both serve to increase the amount due on a specific account or transaction. However, “Debit Note” is the standard terminology used in Singaporean accounting and by IRAS.
3. Do I need to keep copies of my debit notes?
Yes. Under the Singapore Companies Act and GST Act, you must maintain all financial records, including debit notes, for at least 5 years.
4. What if I am not GST-registered?
You should still issue debit notes to keep your accounts receivable accurate, but you do not need to include GST registration numbers or the 9% tax breakdown fields.
