Credit Note Format under GST

Credit note format (GST compliant)

Use this format for a GST credit note. FundRaksha Book issues credit notes against the original invoice and keeps the customer ledger in sync automatically; the first 300 invoices are free.

CREDIT NOTE
(Issued under Section 34(1) of the CGST Act, 2017 read with Rule 53)

Supplier: [YOUR COMPANY NAME]
Address: [ADDRESS]
GSTIN: [YOUR GSTIN]            State: [STATE NAME]   State code: [CODE]

Credit Note No.: [CN NO. - max 16 characters, e.g. CN/25-26/009]
Credit Note Date: [DATE]

Recipient: [CUSTOMER NAME]
Address: [CUSTOMER ADDRESS]
GSTIN: [CUSTOMER GSTIN]        State: [STATE NAME]   State code: [CODE]
(If recipient is unregistered: name, address and delivery address with state name and code)
Place of supply: [STATE NAME AND CODE]

Against original tax invoice(s): [INVOICE NO.] dated [INVOICE DATE]

Reason for credit note: [Goods returned vide your letter / GRN [NO.] dated [DATE] / Excess rate charged / Deficiency in services agreed on [DATE] / Discount as per agreement dated [DATE]]

S.No. | Description             | HSN/SAC   | Qty   | Rate (Rs.) | Taxable value (Rs.)
1     | [DESCRIPTION]           | [HSN/SAC] | [QTY] | [RATE]     | [AMOUNT]

Taxable value reduced:            Rs. [AMOUNT]
CGST @ [RATE]%:                   Rs. [AMOUNT]
SGST/UTGST @ [RATE]%:             Rs. [AMOUNT]
(or) IGST @ [RATE]%:              Rs. [AMOUNT]
Total amount credited:            Rs. [AMOUNT]
Amount in words: Rupees [AMOUNT IN WORDS] only

Your account has been credited with the above amount. Balance outstanding after this credit note: Rs. [BALANCE].
This credit note is issued only for the reason stated above and does not settle any other amount due.

For [YOUR COMPANY NAME]

[AUTHORISED SIGNATORY]
(Signature / digital signature)

How to fill it

1. Confirm the reason is one Section 34(1) allows: excess value, excess tax, goods returned, or deficient services. A post-supply discount reduces GST only if it was agreed before the supply and is linked to specific invoices, with the recipient reversing the input tax credit (Section 15(3)).
2. Use a separate credit note series, unique for the financial year, up to 16 characters.
3. Quote the original invoice number(s) and date(s), and the GRN or letter that supports a return or claim.
4. Reduce tax at the same rate and with the same CGST/SGST or IGST split as the original invoice.
5. Report it in GSTR-1 for the period of issue, before the Section 34(2) deadline. If you are above the notified turnover limit for e-invoicing, report it to the IRP too.
6. Write the balance still outstanding on the credit note, so the customer cannot treat it as closing the account.

Common mistakes

• Issuing a credit note to make a buyer pay. A buyer says 'issue a credit note for 5% and we will release the payment'. Once issued, the 5% is gone, and the payment may still not come. Agree the release date in writing first, or issue the credit note only on receipt.
• Missing the deadline. A credit note declared after 30 November following the year end (or after the annual return, if earlier) does not reduce your output tax.
• Using a GST credit note for a pure trade discount not agreed before supply. Issue a commercial (financial) credit note without GST instead.
• No balance shown. A credit note that does not state the remaining balance invites the argument that the account was settled.

Credit notes and payment disputes

Credit notes are where many recoveries go wrong. Buyers who want to pay late raise quality complaints after the due date, ask for a credit note, and then delay again. If the complaint is genuine and was raised on time, settle it with a credit note and record the balance. If it is not, reply in writing, refer to the inspection or GRN, and refuse the credit note. Read the credit note dispute entry and the problem page on quality disputes raised after the due date.

Every credit note you issue should appear on your statement of account and the next balance confirmation. If the agreed balance is still unpaid, an advocate's notice is the next step: FundRaksha Legal sends it within 24 hours, and about 60% of cases settle before court.