Credit and debit notes

Use credit and debit notes to adjust an invoice amount after it has been issued — for example, to correct an overcharge, account for returned goods, or apply a post-invoicing discount.

When to issue
Creating a note
Note type
Date and amount
Foreign currency handling
Reason selection
GST impact
Impact on invoice balance
Impact on realization percentage
Journal entry
Tips
Related articles

When to issue

Scenario	Note type	Example
Amount correction	Credit note	Invoice was for $5,000 but should have been $4,500
Returned goods	Credit note	Client returned part of the shipment
Service cancellation	Credit note	A service was cancelled after invoicing
Post-invoicing discount	Credit note	You agreed to a discount after the invoice was sent
Additional charges	Debit note	Extra work was performed beyond the original scope

Creating a note

Open the invoice detail page for the invoice you want to adjust.
Scroll to the Notes section.
Click the button to add a new credit or debit note.
Fill in the form fields and click Create Credit Note or Create Debit Note.

Note type

Select the note type from the Note Type dropdown:

Type	Effect
Credit note	Reduces the invoice amount — the client owes less
Debit note	Increases the invoice amount — the client owes more

The form title and description update to reflect your selection.

Date and amount

Note Date — select the date of the adjustment using the calendar picker. The date cannot be in the future.

Amount — enter the adjustment amount in the invoice's currency. The amount must be greater than zero.

Foreign currency handling

For export invoices (non-INR currency), the form shows a three-column layout:

Field	Description
Amount (foreign currency)	The adjustment amount you enter
Exchange Rate (to INR)	Auto-fetched for the note date. Editable. Shows "1 USD = X INR" (or the relevant currency).
Amount (INR)	Auto-calculated from the foreign amount and rate, shown as read-only

When you change the note date, the exchange rate auto-updates to the historical rate for that date.

Reason selection

Select a reason from the Reason dropdown:

Reason	When to use
Quantity correction	Incorrect quantities on the original invoice
Rate change	Price was changed after the invoice was issued
Return	Goods returned by the client
Discount	Discount applied after invoicing
Other	Any other reason — describe in the text field below

Use the optional Reason Description text area to provide additional context.

GST impact

GST fields appear only for domestic clients (those with a GSTIN on file).

Client location	GST fields shown
Same state (Maharashtra)	CGST Rate (%) and SGST Rate (%)
Different state	IGST Rate (%)

Enter the applicable rate. The system calculates the tax amount and displays a summary:

Base Amount (INR)
CGST, SGST, or IGST amounts (when applicable)
Total Amount (INR)

Compliance effect: Credit notes reduce your output GST liability. They appear in GSTR-1 and must reference the original invoice.

Impact on invoice balance

Credit and debit notes adjust the invoice's adjusted_amount_foreign field:

Note type	Effect on balance
Credit note	Reduces the amount the client owes
Debit note	Increases the amount the client owes

The invoice summary card on the payment page shows the adjusted amount as After Notes when notes have been applied.

Impact on realization percentage

For export invoices, credit and debit notes affect the realization percentage. Since the adjusted invoice amount changes, the percentage of realized payments recalculates accordingly.

For example, if a $10,000 invoice has $8,000 in payments (80% realized) and you issue a $2,000 credit note, the adjusted amount becomes $8,000, making the realization 100%.

Journal entry

A journal entry is created automatically when the note is saved, recording the adjustment against the appropriate revenue and tax accounts.

Tips

Match the GST rate to the original invoice. Use the same tax rate that was applied on the original invoice so the adjustment is consistent.
Issue credit notes promptly. Delayed credit notes can create reconciliation issues in GSTR-1 and affect your compliance timeline.
Use reason descriptions. The free-text field is helpful during audits and when reviewing adjustments months later.
Check the realization tracker after issuing a note. For export invoices, the note may change your realization percentage and affect eBRC compliance.

Payment tracking — Record payments with foreign currency support and consolidated remittances
eBRC compliance — Record GSTIN and invoice details for electronic Bank Realization Certificates
Realization tracking — Track payment realization deadlines under FEMA
Export invoicing — Create compliant export invoices
Multi-currency support — Working with foreign currency invoices

Credit and debit notes