GST Credit Note

Find out when and how to issue GST compliant credit notes as a
supplier of goods or services.

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All suppliers of goods or services create invoices on a daily basis. There are situations when you have already issued an invoice but your client is not happy with the received products / services or there is a discordance in your invoice. 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 there are any problems with the goods or services supplied to a client, or they simply decide to return goods, the supplier has to issue to the recipient 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:

Credit Note Format

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.

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