Credit Note
A credit note is a document issued by a seller to reduce the amount owed on a previously issued invoice — commonly used for refunds, discounts, or returned goods/services.
If you’ve already issued an invoice but need to reduce what the client owes — because of an overcharge, a discount agreed after the fact, or a service issue — you issue a credit note referencing the original invoice, rather than editing or deleting the original.
Under GST, credit notes have specific rules: they must reference the original invoice number, be issued within a specified time limit, and be reported in your GST returns, since they affect your GST liability for that period.
Keeping a clear paper trail of credit notes (rather than just adjusting future invoices informally) makes it much easier to reconcile your books and defend your GST filings if ever queried.