Credit note format in GST

A credit note is a document a seller issues to reduce the value of an invoice already raised—because goods were returned, a service was partly cancelled, or the client was overcharged. It tells the client: you owe less than the original invoice said.

When should you issue one?

• The client returned goods or rejected part of the work after invoicing.
• You charged the wrong (higher) rate or quantity on the original invoice.
• You agreed a discount after the invoice was issued.
• The advance or final amount needs adjusting downward against an invoice.

Never edit or delete the original invoice to fix these cases—issue a credit note linked to it, so both parties' books and GST returns stay consistent.

What GST says

Section 34 of the CGST Act allows a registered supplier to issue a credit note where the taxable value or tax charged exceeds what should have been charged, or where goods are returned or services found deficient. The reduction must be declared in your GST return, and the adjustment is matched against the recipient's records. Read CGST Section 34.

The particulars of credit and debit notes are prescribed under the CGST Rules (Rule 53): a consecutive serial number, date, the original invoice number and date it relates to, the recipient's details and GSTIN where registered, the taxable value, rate and amount of tax credited, and the issuer's signature or digital signature.

Sample credit note format

Illustrative details only—not a real business or transaction.

Document title

CREDIT NOTE

Credit note no.

CN-001 (separate series from invoices)

Date

30 October 2026

Issued by

Example Design Studio, GSTIN 27AAAAA0000A1Z5

Issued to

Example Client Pvt Ltd, GSTIN 29BBBBB1111B2Z3

Against invoice

INV-001 dated 15 October 2026

Reason

50% of design work cancelled after invoicing

Taxable value credited

₹25,000

IGST @18% credited

₹4,500

Total credit

₹29,500

Signature

Authorised signatory / digital signature

Use the same tax split as the original invoice: CGST + SGST for an intra-state supply, IGST for an inter-state one. The credit reduces your output tax liability only to the extent the recipient reverses the corresponding input tax credit.

Credit note vs debit note

A credit note reduces what the buyer owes (seller issues it). A debit note increases what the buyer owes—for example when the original invoice undercharged. Buyers also raise debit notes to a supplier when returning goods they purchased. Both must reference the original invoice.

Common mistakes to avoid

• Not linking the credit note to the original invoice number and date.
• Mixing credit note numbers into the invoice series—keep a separate consecutive series.
• Reducing your tax liability in returns without the recipient reversing their input credit.
• Issuing a credit note for a payment refund with no change in the supply value—that is a payment matter, not a tax adjustment.

GST rules change and their application depends on your situation. Confirm time limits and return reporting with your accountant before filing.