Credit Note Under GST: When and How to Issue One
Issue a GST credit note when the value or tax on an invoice turns out too high – goods returned, a post-sale discount, a price correction or deficient services. It must reference the original invoice, show the reduced taxable value and tax, and be issued by 30 November after the end of the financial year (or the annual return date, if earlier).
When to issue a credit note
- Goods returned by the buyer.
- Taxable value or tax charged was higher than it should have been.
- Discount agreed after the sale.
- Services found deficient or not fully supplied.
What it must show
- Your name, address and GSTIN.
- Credit note number (its own series) and date.
- Buyer's name, address and GSTIN.
- Original invoice number and date.
- Taxable value, rate and the amount of tax being reduced.
- Signature.
Deadline
Declare it in a return no later than 30 November following the end of the financial year in which the original supply was made, or the date of filing the annual return – whichever is earlier.
Credit note vs debit note
A credit note reduces the amount you charged; a debit note increases it (for example, when you under-billed).
In Invoice24
Open the invoice and choose Credit note. It copies the client and lines, links to the original number and keeps its own series, and your reports and client statements adjust automatically.
Frequently asked questions
Can I cancel a GST invoice instead?
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Once the invoice is reported in GSTR-1, adjust it with a credit note. Before reporting, you may cancel and reissue.
Does a credit note reduce my GST liability?
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Yes, the tax on the credit note reduces your output tax in the return where it is declared.
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