Credit Note

A document a seller issues to reduce the amount a buyer owes — for returns, overcharges or discounts.

A credit note is issued by a seller when the value of an earlier invoice needs to be reduced — for example when goods are returned, the buyer was overcharged, or a discount is granted after billing.

Under GST, a credit note adjusts output tax liability and must reference the original invoice. It is the opposite of a debit note.

• Reduces the buyer's payable amount.
• Common for sales returns, overcharges and post-sale discounts.
• Adjusts GST liability; references the original invoice.