Make a GST credit note

A GST credit note lowers an amount you charged or were charged. You issue one to a customer, for example when you allow a rate difference on a bill. You receive one from a supplier who lowers a bill. A credit note is only an amount: no stock moves. Saving it changes the party’s balance and corrects the GST in your returns.

Open a new credit note

Press Alt+1 for the Transactions menu, H for G S T Credit Note, then N for New Entries.

1 H N: Transactions, G S T Credit Note, New Entries.

The screen opens on Credit Notes Issued, with the cursor in the Type field. The date and due date start on today’s working date, and the payment on Credit. The next number of the book shows beside it (No. CN/1 here).

A new credit note issued. The debit account is already filled in; the credit account follows the party.

Choose the party

In the Issued to field, type part of the account’s name. The list shows each matching account with its place, GSTIN and balance. Enter takes the highlighted one. F2 lists every account.

The note needs a saved account. Typing finds it by any part of its name.

Once the party is chosen, its place, GSTIN and state fill in, and A/c balance shows what the party owes you before this note.

The balance before the note: ₹6,575.00 to receive.

The GST field is set from the party’s state: CGST and SGST for a party in your state, IGST for a party in another. You can change it, and every line is worked out again. The label at the top right of the screen shows whether the party is registered and which tax applies.

Check the accounts

Debit a/c and Credit a/c are the two accounts the note posts between. For a credit note issued, the credit side is the party and cannot be changed (it shows “Follows the party”). The debit side starts with the account set for the note type, Trade Discount Allowed here. Type another account name, or press F2 to list them, if the amount belongs somewhere else, such as a sales returns account.

The note debits Trade Discount Allowed and credits the party.

Payment is Credit or Cash. On a credit note the party’s side goes to the party’s account. On a cash note it goes to the cash account of the note’s book instead.

Add the amounts

Each line is one amount. Type what it is for in Description, then press Enter through the other cells:

• Kind: Adjustment carries GST. Add + GST is a taxable charge. Add and Less are plain amounts without GST, for example a round-off: Add raises the note’s net amount and Less lowers it.
• HSN: the HSN of the goods the amount corrects. A new line starts with the HSN and GST % of the line above.
• Orig. bill and Bill date: the number and date of the bill the note corrects. The date cannot be after the date of the note.
• GST %: the rate on the amount.
• Before GST: the amount. Type it and the CGST and SGST (or IGST) and the Total are worked out.

The description, kind, HSN and the bill the note corrects.

₹140.00 at 5% GST is ₹3.50 CGST and ₹3.50 SGST: ₹147.00 in all.

A line worked out from the total including GST

When you know the amount including GST, leave Before GST empty and press Enter. The cursor goes to Total. Type the total and SimplyERP works back to the amount before GST and the tax.

₹262.50 including 5% GST is ₹250.00 before GST and ₹6.25 for each tax.

The status line under the grid names the line, its GST and the bill it corrects. A line worked out from its total says so.

The status line of the line under the cursor.

A blank line is always ready at the bottom. Ctrl+Delete removes the line under the cursor.

Two lines, ₹409.50 in all.

Optional columns are under the column button at the end of the grid header: Line account, Narration, Reference quantity, Price difference and Discount. A Line a/c posts that line to another account than the note’s debit account. A column that holds a value on any line always shows. A note always shows Orig. bill and Bill date.

Check the totals

The totals under the grid show the number of lines, the amount before GST, the CGST and SGST (or IGST), any Add or Less amounts, and the net amount.

The net amount of the note, ₹409.50, is ₹390.00 plus ₹19.50 of GST.

The net amount must be above zero.

Save

F3 saves the note. F10 saves and prints it; a credit note issued prints, and a credit note received does not, so it has no Save & print button. A notice says the note is saved and a new, empty credit note opens. It keeps the type you used.

SimplyERP refuses to save a GST note unless an Adjustment or Add + GST line with an amount has a GST rate or an HSN. A note of plain amounts with no GST corrects no bill in your returns. Make it as a non-GST note instead: see Make a non-GST credit note.

Every note you save is in All Bills (1 Y). Type the number in Find, then press Enter to open it.

Notes are numbered from their book: CN/1.

The saved note shows every recorded detail. The party’s balance is now ₹6,165.50 Dr, which is ₹6,575.00 less ₹409.50.

What saving does to your books

A credit note issued is posted on its date. Debits and credits:

Each line posts on its own, so an account shows one posting for each line. A Less line posts its amount on the other side. For this note, Sri Lakshmi Agro Traders is credited ₹409.50. Trade Discount Allowed is debited ₹140.00 and ₹250.00, and the CGST Output 5% and SGST Output 5% accounts ₹3.50 and ₹6.25 each: ₹390.00 and ₹9.75 each in all. No stock moves.

In the GST returns a credit note issued lowers your output tax. GSTR-1 lists the notes of registered customers in its credit and debit notes table, and nets the notes of unregistered customers in its state and rate table. GST Monthly Totals takes the tax off your output tax. The party’s ledger shows the note.

A credit note received

A credit note received is one your supplier sends you. Choose Credit Notes Received in the Type field, or press Alt+1, H, N and change the type. The header changes, because the supplier numbered and dated the note:

• Their note no.: the supplier’s number for the note. Leave it empty to use the next number of your book (CNR/1 here).
• Note dt.: the date on the supplier’s note.
• Recd.: the day you received it. It starts on the working date. The note enters your books on this day, and its date cannot be later than it.
• The party field is Received from. The party side is now the debit side, and the credit account starts with the account set for the note type (Trade Discount Received here).

The supplier’s note number and the two dates.

Lines work as on an issued note. This supplier is in another state, so the GST field turned to IGST by itself and the grid has an IGST column.

The supplier’s balance before the note is ₹51,302.00 Cr, shown beside the GST field.

After the note you owe the supplier ₹1,260.00 less: ₹51,302.00 Cr becomes ₹50,042.00 Cr.

The postings are the other way round, and the tax goes to the input tax accounts:

Here Deccan Agrotech Distributors is debited ₹1,260.00, Trade Discount Received is credited ₹1,200.00 and IGST Input 5% ₹60.00. A credit note received lowers your input tax credit in GSTR-2 and GST Monthly Totals.

Change or delete a note

Open the note from All Bills and press F4 to edit it, or Ctrl+Delete to delete it after SimplyERP asks. An edit cannot change the note’s type or book. A note with an active e-invoice cannot be edited or deleted until the e-invoice is cancelled.

Keys on the note screen

On a Mac, ⌥ stands for Alt and ⌘ for Ctrl.

Common questions

Does a credit note change my stock? No. A note carries amounts only. To take returned goods back into stock, make a sales return or a purchase return.

Can I type a negative amount? On a Description line of kind Adjustment or Add + GST, yes: a negative amount offsets another line. The net amount of the note must still be above zero.

Can I leave the screen without saving? Yes. What you typed is kept in Drafts when you leave, and 1 Z lists the drafts. See Drafts.

Why does SimplyERP say the note number already exists? Each type keeps its numbers apart, and a number can be used once. A received note takes the number you type in Their note no.