A document issued by a seller to a buyer reducing the amount owed, typically for returned goods, billing errors, or post-sale discounts.
Credit notes adjust the original invoice amount downward. Under GST, a credit note must reference the original invoice and include specific details. It reduces the seller's output tax liability and the buyer's input tax credit. Credit notes must be reported in GST returns (GSTR-1) and should be issued before the earlier of September 30th following the financial year or the date of filing the annual return.
A customer returns defective goods worth ₹10,000 (plus ₹1,800 GST). The seller issues Credit Note CN-001 for ₹11,800, reducing the customer's outstanding balance.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
When goods are returned, there's a price reduction after supply, the tax charged is higher than actual, or the goods/services are found deficient. It must be issued before the deadline specified under Section 34 of CGST Act.
Yes. The seller's output tax liability is reduced, and the buyer must correspondingly reduce their input tax credit claim for the original invoice.
A document issued by a seller to increase the amount owed by a buyer, typically when the original invoice amount was less than the actual value.
A commercial document issued by a seller to a buyer, detailing the products or services provided, quantities, prices, and payment terms.
A comprehensive indirect tax levied on the supply of goods and services in India, replacing multiple earlier taxes like VAT, excise duty, and service tax.
Money owed to a business by its customers for goods or services delivered but not yet paid for.
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