Credit & debit notes — money-only adjustments
Adjust a party's balance without moving any goods: a post-sale discount, a rate correction, or a charge you are recovering.
Sometimes you need to change what a party owes — or what you owe them — without any goods changing hands. That is what credit notes and debit notes are for. They are pure value adjustments, recorded the same way you record a journal: a few balanced lines, no item table, no stock movement.
| Note | Raise it when… | Everyday example |
|---|---|---|
| Credit Note | You are reducing what a customer owes you | A discount agreed after the invoice, or a rate revised downward. |
| Debit Note | You are increasing what a party owes you | Charging a customer a revised higher rate, or recovering freight from a supplier. |
Raise a note
- 1
Open the voucher
Go to Transactions → Vouchers → Credit Note (or Debit Note).
- 2
Enter the lines
Add balanced lines just like a journal — name the party account on one side and the matching head (a discount, an income, or a tax account) on the other. Debits must equal credits.
- 3
Add a narration
Say exactly why the adjustment is being made — it is the first thing anyone reviewing the account will read.
- 4
Save
The party's balance updates immediately, and the note appears in the voucher registers.
Say who the note is for
A credit note and a debit note can each go in either direction, and the two directions are treated very differently by GST — so both screens ask you which one you mean. Pick it from Issued To in the note's header.
| On a… | Issued To | What it means | Raise it when… |
|---|---|---|---|
| Debit Note | Supplier (default) | Lowers the tax you can claim | You are recovering a charge from a supplier, or a purchase rate was revised downward. |
| Debit Note | Customer | Adds to the tax you owe | You billed a customer too little and are now charging the difference. |
| Credit Note | Customer (default) | Lowers the tax you owe | You are reducing what a customer owes you — a discount or a rate revised downward. |
| Credit Note | Supplier | Lowers the tax you can claim | A supplier has credited you — a rate correction, or a turnover or target discount received. |
Each note keeps the direction it has always had unless you say otherwise. A debit note is treated as issued to a supplier and a credit note as issued to a customer — so leave Issued To alone and nothing about the note changes. Set it only when you mean the other direction: charging a customer the difference on an invoice that under-charged, or recording a credit a supplier has given you.
Post a customer debit note to your Output tax heads
A debit note issued to a customer increases the tax you owe, so its tax lines belong on your Output tax accounts and its value on a sales-side head — not on Input tax or a purchase head. Choose Customer under Issued To and pick those accounts on the lines, and the note is reported as an outward note in your GST return.
One thing has changed for notes to unregistered customers
A credit or debit note raised on a customer who has no GST number is now subtracted from — or added to — your B2C (Small) summary, instead of being left out of it. That is what the return asks for, so the figure is more correct than before; but if you compare this month's B2C summary with a copy you kept earlier, expect it to differ by the value of any such notes in the period. Notes to customers who do have a GST number are unaffected.
A tax-only note to an unregistered customer needs a manual line on the portal
If a note carries tax but no value — you corrected only the rate, so there is no goods amount on it — your return cannot work out which rate row it belongs to, and a note to a customer without a GST number has no other place to go. The note stays in your books and on your GST screens as normal, and the Audit Report lists it so you can find it; you then adjust the rate-wise row for the original supply yourself on the portal. A note that carries both a value and its tax needs nothing extra, including one that covers goods at more than one tax rate: your return now reports it as one line per rate, the same way it reports an invoice.
Existing notes are untouched
Every debit note you raised before this choice existed stays exactly as it was — treated as issued to a supplier. Set Issued To only on the notes you actually mean to charge a customer for.
When it counts for GST
If a note includes a tax line, it is reported in the credit/debit-note section of your GST return automatically — on the sales side for a note issued to a customer, and on the purchase side for one issued to a supplier. A purely financial note with no tax line simply adjusts the ledgers and stays out of GST — exactly as it should.
Goods actually moved? This is the wrong screen.
Credit and debit notes never touch stock. If a customer physically returned goods, raise a Sale Return; if you physically returned goods to a supplier, raise a Purchase Return. Those keep your inventory correct; notes do not.
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