GST Credit Note

The suppliers of goods or services will create the credit note for their daily trade settlement. In certain situations, you issue the invoice but the client is not happy with received products or services or sometimes differences in invoice so in such cases, there will be a negative impact in your accounting balance so you will have to issue a credit note.

What is a Credit Note?

If problem happened with your provided good and services or clients decides to return goods so the supplier has to issue a credit note to reduce tax liability.

When do I issue a credit note?

You will need to issue a credit note in these situations:

• When the goods supplied are returned by the recipient;
• When services or goods provided to your client are found to be deficient;
• When the quantity received by the client is less than what appears in the tax invoice issued;
• When the supplier has declared a higher tax rate that the actual amount of tax to be paid for the goods or services provided;
• When the supplier has declared a value more than the actual value of the goods or services provided;

What is the credit note format?

Based on the government regulations, a credit note under GST must contain the following:

• Name, address and GSTIN of the supplier;
• Nature of the document - ie. Credit Note;
• Unique serial number for the financial year;
• Date of issue;
• In the case of registered recipient: Name, address, GSTIN of recipient;
• In the case of unregistered recipient: Name, address of recipient, address of delivery along with State Name and State Code;
• Serial number and date of the corresponding tax invoice (or bill of supply);
• The taxable amount of goods or services, the rate and amount of tax credited to the recipient;
• Signature or digital signature of the supplier, or an authorized representative;

This is how a credit note made with Sleek Bill Online looks like:

Download Invoice Templates

Credit notes have to be declared in the GST returns by the following dates:

• Till the annual return filing date or
• No later than the 30th of September, following the end of the financial year in which the supply was made;

Please Note: There will be no reduction of output tax liability if the input tax credit and interest on the invoice have been passed to another registered person.

How do I create a credit note?

You can easy generate a credit note by using Sleek Bill Online. Once you create the credit note, the amount present in it gets adjusted against the original tax invoice.

Step 1 : First open credit note dashboard in sleekbill.

Step 2 : Click on new button

Step 3 : Fill all the necessary fields.Save the credit note.

Step 4 : After Savig you will get credit note.

Diff Between Credit note and Debit Note

You can easy generate a credit note by using Sleek Bill Online. Once you create the credit note, the amount present in it gets adjusted against the original tax invoice.

Aspect	Debit Note	Credit Note
Issuer	Buyer of goods	Seller of goods
Purpose	To return goods due to issues	accept the return of goods
When issued	For credit purchases	For credit sales
Impact	Reduces seller's receivables	Reduces buyer's payables
Amount type	Positive	Negative
Form	Purchase return	Sales return
Accounting	Updates purchase return books	Updates sales return books
Issued for	Buyer returns goods	Seller accepts return

Benefits of Credit note

• Maintaining goodwill It will keep happy for solving their issues.
• Correcting errors It Will correct the errors in the invoices or transaction.
• Tax compliance It Will help to follow the tax rules properly.
• Financial control By using credit note it will show transparent and Accurate account.