Credit Note Format & Free Maker

What is a credit note under GST?

A credit note is issued by a supplier to reduce the value or tax of an invoice already issued. Under Section 34 of the CGST Act, it is used when the taxable value or tax charged was higher than it should have been, when goods are returned, or when goods or services supplied are found deficient. hisabkitab’s free credit note maker follows the Rule 53 format.

What must a GST credit note contain?

Under Rule 53(1A) of the CGST Rules, a credit note should show:

• Name, address and GSTIN of the supplier

• The words “Credit Note” as the nature of the document

• A consecutive serial number of up to 16 characters, unique for the financial year, and the date

• Name, address and GSTIN of the recipient

• Serial number and date of the original tax invoice

• Taxable value, GST rate and the amount of tax credited

• Signature or digital signature of the supplier

When should a credit note be issued?

A credit note must be declared in the GST return for the month in which it is issued, and not later than 30 November following the end of the financial year in which the original supply was made, or the date of filing the annual return, whichever is earlier. After that date, the GST on the original invoice cannot be reduced through a credit note.

How does a credit note affect the buyer?

The supplier reports the credit note in GSTR-1, which reduces their output tax. The buyer sees it in GSTR-2B and must reduce the matching input tax credit. Keeping the original invoice number on the credit note makes this matching easy for both sides.

Credit note vs debit note

A credit note reduces the amount of an earlier invoice. A debit note increases it, for example when goods were under-billed or the price went up after the invoice was issued.