Credit Notes
Issue credit notes to customers for returns or price corrections, and track whether each one has been used.
Why and when you use it
A credit note is the proper way to reduce what a customer owes after an invoice is made, for goods returned, a rate charged too high, or a discount agreed later. It also reduces your output GST in a way your CA can show in GSTR-1. Accountants and owners use this screen; salesmen usually just report the reason.
Before you start
- Have the original invoice number ready (Sales Invoices)
- For returned goods, save the return first in Returns
Step by step
- Open Credit NotesOpen Credit Notes from the Sales area. The list shows CN #, Customer, Invoice, Return, Amount and Used.
- Start a new credit notePress New Credit Note and pick the invoice the credit is for. If it comes from a return, pick that return so the two stay linked.
- Enter the amountEnter the amount of the credit. For a return it is the value of goods returned with GST; for a price correction it is the difference you over-charged.
- Issue itPress Issue Credit Note. Stockivio may ask you to confirm; press Continue or Yes, save, or Go back to change something.
- Track its useA new credit note is Active. When it is adjusted against the customer's dues or refunded, it becomes Used. Cancelled shows credit notes that were withdrawn.
- Correct details if neededOpen a credit note and use Save Changes for allowed corrections. Amounts that are already used should be handled with a fresh document rather than edited.
Worked example
After Gupta Kirana Store's return of 3 damaged cartons was approved, Sharma Traders issues a credit note on 14 Nov 2026 for ₹4,248 (₹3,600 + CGST ₹324 + SGST ₹324).
- Open Credit Notes and press New Credit Note.
- Pick the 12 Nov 2026 invoice for Gupta Kirana Store and the linked return.
- Amount: ₹4,248.
- Press Issue Credit Note, then Yes, save.
- The new CN shows in the Active filter with Invoice and Return filled in.
Result: Gupta Kirana's outstanding drops from ₹18,320 to ₹14,072 once the credit is adjusted, and output GST for November is reduced by ₹648. When it is adjusted, the credit note moves to Used.
💡 Tips
- Write the reason clearly when asked (return, rate difference, scheme discount); your CA will need it for GSTR-1.
- Check the Active filter at month end; old unused credit notes mean money you owe customers or balances that were never adjusted.
- For a pure discount without goods coming back, ask your CA whether GST should be reduced, as it depends on the terms agreed before the sale.
⚠️ Common mistakes
- Issuing a credit note without linking the invoice. Always pick the invoice so the GST adjustment is traceable.
- Giving a credit note and also a refund for the same amount. Use one: a credit note adjusts the balance; a refund pays money out against it.
- Reversing the original invoice when only part of it is wrong. Use a credit note for the part instead.
Questions
Credit note or reversing the invoice: which one?
Reverse the invoice only when the whole invoice is wrong and nothing has happened since. Use a credit note when part of the goods came back or the price needs reducing.
Is there a time limit for credit notes under GST?
Yes, GST law sets a deadline linked to the financial year. Check with your CA for the exact date that applies.
🎬 Video walkthrough (script — recording coming soon)
- Scene 1: The Credit Notes list with Active, Used and Cancelled filters.
- Scene 2: Press New Credit Note and pick the invoice and return.
- Scene 3: Enter ₹4,248 and press Issue Credit Note, then Yes, save.
- Scene 4: Show the CN in the Active list with Invoice and Return columns.
- Scene 5: Show the customer's lower outstanding in Receivables.