Credit Note Format | App
Vyapar seamlessly simplifies business management and credit note issuance. Trusted by over 10 million small business owners in India, It offers user-friendly features and accessible credit note formats. No technical expertise is required. Let’s start your Vyapar journey Now!
Highlights of Credit Note Format
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What is a Credit Note?
A credit note is a document acknowledging sales returns that the seller issues to the buyer. The customer can use the credit note in the future to offset future purchases. A credit memo is also known as a credit memorandum. It implies that a buyer owes a seller less than their previous invoice. You can create and send credit notes free using a professional credit note format.
It serves as the basis for the sales return journal. A supplier can issue a credit note if there is a reduction in the taxable value of the goods supplied. Although it is not a refund, it is a way for customers to buy products later without paying for them. The credit note is an acknowledgment of the debit note raised by the buyer.
Why is a Credit Note Used?
A credit note is permitted by Section 34(1) of the CGST Act when an issued tax invoice needs amendment to reduce tax liability. The uses of credit notes are as follows:
- When the buyer returns a sale due to quality issues, service rejection, or damaged goods.
- If the seller has collected a higher price or the buyer has erroneously paid more than the invoiced price.
- Sellers may issue credit notes as post-sale discounts instead of refunds for goods returned.
- When the customer receives less quantity of goods than mentioned in the tax invoice.
- In any such situation, the buyer exchanges his purchase for other items available during the sale.
When Should Credit Notes Be Issued?
Section 34(2) of the CGST Act, 2017 states the time limit to issue credit notes. As per the act, a supplier can give a credit note on or before 30th September. Or before the date of filing of the annual return, whichever is earlier.
When a supplier/business needs to cancel an already-sent invoice, they issue a credit note. Companies can create professional credit notes using the Vyapar credit note formats.
The primary reason to give a credit note is to keep accounting records straight. You can not delete or edit an invoice once it is issued. But, the credit notes let you modify the invoice amount without deleting the invoice.
Now you must be wondering why you can’t delete invoices. The simple answer is that it is illegal to delete the invoice. You can not delete an invoice once issued according to the law. The authorities monitor and regulate these actions very strictly to protect consumer interests.
However, there are certain situations where it is necessary to cancel an invoice. The cancellation of an invoice requires the issuance of a credit memo. After all, invoices are legally binding documents.
Moreover, a credit memo allows customers to use their funds as they deem fit. Credit notes do not have to be linked to invoices. They can be issued separately to a customer.
Why do You Need a Credit Note?
Let’s understand why a credit note is required through an example. A seller creates an invoice for the goods or services sold to a customer. But if the customer observes some quality issues later, he can cancel/modify the purchase. The customer will return the goods or ask for an exchange and send a debit note.
Now, the supplier will accept and prepare a credit note using a free credit note format. It is done to acknowledge the buyer. To prepare a credit note professionally, the supplier can use various formats made available by Vyapar.
Contents of Credit Note:
A professionally created credit note includes the products, quantities, and prices for products or services the buyer returns. The supplier can issue a credit note in the event of defective goods, errors, or allowances.
Under any law, there is no prescribed credit note format. However, the supplier can include the following information in a credit note.
1. Name and address of the business.
2. GSTIN of the supplier.
3. Document type, whether debit or credit note.
4. Unique serial number not exceeding 16 characters.
5.Date of issue of the credit note.
6. The total taxable value of supply, rate, tax, and tax credit.
7. Supplier or his authorized representative’s signature.
Using a credit memo will reduce the buyer’s obligation to pay the previously issued invoice. The credit memo usually refers to the original invoice and states the issue. It may include a PO #, a date, a billing address, a shipping address, and payment terms. Further, it can have a list of products with quantities and prices.
How to Create a Credit Note in the Vyapar App?
Open the Vyapar App. There are two options available to log the entry of credit notes.
1. Click on add more (+) button
- You will find a sale return. Click on it
- Enter the customer’s name, date, and invoice number.
- Enter the details of the product that are being returned, such as their name and amount of goods.
- Save the invoice
This method takes a lot of time, so Vyapar offers you an easy option. You can use it when you want to adjust a credit note to its specific invoice.
2. Go to the left menu
- There is a sale section; click on it
- Click on the sale invoice. You will see the list of all invoices
- In the search bar, find the invoice with the returned product
- You can perform the search by party name-wise, invoice number-wise, date-wise, amounts-wise, or invoice balance
- The invoice will appear on your screen; click on the three dots and then the return option
- You will see that the credit note is already ready with all the required details.
- You can customize it as per your needs
- Save it after making the necessary changes.
You can check it in the party transaction under the Report section.
Additional Benefits of Using the Vyapar Credit Note App
Track your business status
It is essential to track and manage business activities. Vyapar helps you keep tabs on business cash flow, inventory status, orders, and payment updates. The business dashboard of the app makes the process effortless. You can categorize your expenses and income. It will help give you a clear picture of your business transactions.
Avail Lifetime free basic use:
You can access multiple credit note formats free using the Vyapar billing software. You can also manage your dashboard, maintain inventory, and use many other features. You can do it for free in the Vyapar app for Android mobiles. Additionally, any business can get a free trial for 7-days with the desktop versions.
Manage cash flow efficiently:
A cash flow statement is a valuable document considered vital for short-term planning. It monitors cash flow which helps avoid business risks. Our GST billing and accounting software lets the users record all business transactions. You can also track your payments using the app. The automatic management of the app prevents mistakes in accounting.
Online/Offline software:
Vyapar app allows you to perform your business operations online and offline. You don’t need to stop your activities because of a low internet connection. You can use the credit note formats available in the app to create and send credit notes to your customers. Further, you can generate new invoices, manage your cash book, and record expenses.
Optimized business operations:
It is better to work smartly and keep up with the competition. With the Vyapar app, you can eliminate manual calculations and keep your books updated. It speeds up your accounting process and helps you optimize your business operations. With Vyapar, you can manage everything on a single app.
Secured database:
Our free GST software in India allows you to set up automatic data backups of their data. It allows them to secure the information stored in the app. You can also make a local backup for added security. It also facilitates quick access, file search, and retrieval. Your data is always synced and protected by advanced encryption algorithms.
Provide multiple payment options:
The Vyapar app accepts a variety of payment methods. Cash alternatives include UPI, QR, NEFT, IMPS, eWallet, and credit/debit cards. Customers are less likely to default when provided with multiple convenient payment options. It allows you to generate bills for your customers without staying online.
Other Valuable Features of the Vyapar App
GST Invoicing / Billing
A professional invoice represents the identity of a company. You can create GST bills that comply with India’s GST law by using Vyapar billing software. It automates your billing requirements which is a great help for businesses. The Vyapar app effectively assists medium and small businesses to save more time in accounting.
You can create a GST bill online and offline in a few steps and keep your accounts updated. Sharing your invoices with other business owners and customers is easy using the Vyapar app. Unlike other billing software, it will allow you to send GST invoices. You can create and send invoices to your customers within minutes.
Multiple Themes
The Vyapar App includes two thermal invoice themes and twelve regular printer invoice themes. The app allows you to customize and improve the look of your invoice. You can enhance your brand identity by using professional themes for creating invoices.
There are multiple theme options for thermal and regular printers. They are available for free, so all businesses can access them. GST Invoicing Software is suitable for all commercial retailers, pharmaceutical companies, gyms, restaurants, and other businesses. Further, all themes are fully customizable to meet unique business requirements.
Receivables and Payable
The Vyapar Software allows you to keep a record of receivables and payables party-wise. In the Vyapar app, you can track the money you are ‘yet to receive’ and ‘have to pay’ using the business dashboard.
Users can keep all the transaction details secure and issue credit or debit notes seamlessly. You can set up payment reminders to ensure your customers pay on time. Users can send payment reminders to any party via WhatsApp, SMS, or email. You can save time by sending payment reminders to all of your customers using the payment reminder feature.
Online-store
Using Vyapar GST billing software, you can set up your online store. You can list all of the services/products you sell to your customers. It will assist you in presenting a catalog of all the services/products to customers. It will help you increase your online sales seamlessly.
Furthermore, Vyapar billing software does not charge fees for using online store features. These features help assist you in taking your business online. You can directly send the link to your online store to your customers. They can pick products and place orders online from your store.
Credit Note vs. Debit Note
Major differences between credit and debit notes are as listed below:
A debit note or debit memo is a formal request for a credit note. The buyer issues them to the seller. In contrast, a receipt that the seller sends to the buyer informing the customer about the credit made to his account is a credit memo.
Debit notes are issued when a customer or buyer returns the goods/services to the seller. In exchange, the credit notes are given when a seller undercharges an agreement or delivers extra goods.
The debit note is prepared in blue ink, whereas the credit note is in red ink. The supplier issues a credit note to the buyer in exchange for a debit note.
A debit note represents a positive amount, whereas a credit note represents a negative amount. It means that the debit note notifies the reduction in account receivables. Meanwhile, a credit note reduces account payables.
A debit note is a basis for entries in the purchase return book. Meanwhile, a credit note is a basis for the sales return book. So, a debit note reduces purchase accounts, whereas a credit note reduces sales accounts.
Create your first invoice with our free Invoice Generator
Frequently Asked Questions (FAQs’)
Using a credit note format is simple. Open your payment credit note, and under Credit Note Options, select Edit. Make the changes and click Update or Save.
Yes, you can create a credit note using the Vyapar app. Vyapar provides free access to credit note formats for all businesses. The free format can help you save time and effort in creating professional credit notes.
A credit note’s purpose is to allow you to legally amend an invoice without deleting or modifying it. Using a free credit note format helps simplify the accounting as you can mention the modification effortlessly.
Please create a new PDF document, choose an invoice template, and customize it. Save it and share it with customers by printing it or sending it over WhatsApp/email.
The credit note must include:
-> Customer or order reference number.
-> Payment terms and conditions
-> Contact details of a customer
-> Reason for issuing a credit note.
The credit note is like a voucher that the customer can only use at the shop, chain of stores, or business that issued the credit note. So, unlike a refund, it is not providing the cash in hand. However, if the client has not paid, it eliminates their liability to pay for the goods or services.mstance.
Businesses issue invoices to customers as a way of billing for services they provide. A credit note is offered to customers for cancellation or modification of goods or services.
An invoice error, a damaged or incorrect item, a canceled purchase, or any other circumstance can be grounds for a credit note. It indicates the return of funds to the buyer. They can use them to get other goods or services.
E-invoicing is required only for credit and debit notes under Section 34 of the CGST/SGST Act. It is not a requirement for credit notes without GST.
A credit note format includes:
-> Header with business details and credit note number.
-> Date of issue.
-> Recipient details (customer/client).
-> Reason for issuing the credit note.
-> Itemized list of products/services with original and credited amounts.
-> Total credit amount.
-> Payment details (if applicable).
-> Terms and conditions.
-> Authorized signature or stamp.
Total Credit Amount: -$60.00
Payment Details: Refund to [Payment Method]
Terms and Conditions: [Any Terms and Conditions]
Authorized Signature: ____________________
To make a credit note:
-> Identify the reason for issuing (returns, overpayments, etc.).
-> Gather necessary information like original invoice details and customer information.
-> Calculate the credit amount (refund, adjustment, discount).
-> Create the credit note with business and recipient details, reason, itemized list, total credit amount, payment details (if applicable), and terms.
-> Review, approve, and issue the credit note to the customer.
-> Update records and accounting systems accordingly.
Credit notes may include GST adjustments depending on the original transaction:
-> For returned goods where GST was charged initially, the credit note adjusts both the product amount and GST.
-> Similarly, credit notes for discounts or price adjustments should reflect changes in product and GST amounts.
-> If GST wasn’t charged initially (e.g., exempt supplies), the credit note may not adjust GST.
Yes, Vyapar’s credit note app is designed to cater to the needs of small businesses by providing an easy-to-use interface, robust features for managing credits, and ensuring compliance with accounting regulations.
Vyapar’s credit note app offers features such as customizable credit note templates, automated calculations for refunds or adjustments, integration with accounting software, and secure cloud storage for all transaction records.
Using a credit note app such as Vyapar helps businesses maintain accurate financial records, improves transparency in transactions, and enhances customer satisfaction by promptly issuing credits.
Vyapar’s credit note app simplifies the process of issuing refunds by automating calculations and documentation. It ensures that refunds are processed efficiently and accurately, maintaining customer trust and satisfaction.
