A credit note under section 34 of the CGST Act reduces what the buyer owes on an earlier invoice. It is issued when:
- goods are returned;
- the taxable value or tax on the invoice was more than it should have been;
- goods or services were short or deficient.
It refers to the original invoice and shows the reduced value and tax. The seller's GST liability falls, and the buyer reverses the matching credit.
Time limit
A GST credit note must be declared in a return for a month no later than 30 November following the end of the financial year of the original supply, or the date of the annual return, whichever is earlier (as of October 2026).
Discounts
A discount given after the sale reduces GST only if it was agreed before or at the time of supply and can be linked to specific invoices. Otherwise a financial credit note is issued, which reduces what the buyer owes with no change to GST.
In the trade
In Surat's textile markets, goods returns and kasar are part of nearly every outstation sale. Each return needs a credit note against the right bill, or the party ledger and the GST return will both be wrong.