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Business wiki · GST and invoicing

Credit note

A document recording a reduction or correction linked to an earlier supply or invoice.

Search terms: GST credit note sales return

A business example

A retailer returns damaged stock. The supplier agrees to reduce an earlier ₹30,000 commercial invoice by ₹5,000, ignoring tax for this example.

Follow the exampleFictional business scenario

  1. Original invoice

    ₹30,000 was charged for the delivery.

  2. Agreed correction

    A ₹5,000 credit note identifies the return and original invoice.

  3. Revised balance

    ₹25,000 remains before payments and other adjustments.

What this shows

The commercial reduction is clear. Whether and when GST liability can also be reduced requires its own assessment.

What it is often confused with

A commercial adjustment and a permitted reduction of GST liability are separate questions.

What to look at in your business

Connect the note to the original invoice, reason and relevant tax treatment.

Context and further reading

GST portal: invoice furnishing manual. This reference supports the terminology; use the linked guide for applicability and operative requirements.

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Kosha.Services · Updated 2 October 2026

Related terms

GSTR-1

The GST statement used to report outward supply details for the relevant period.

GSTR-3B

The summary GST return used to report relevant liabilities and input tax credit and discharge tax for a period.

Reverse charge

A GST mechanism under which the recipient pays the tax for specified supplies instead of the supplier paying it in the usual way.