Credit Note › Credit note time limit

Time limit for credit notes, and input tax credit

A credit note issued too late does not reduce your GST, even if it is correct. Know the last date for every financial year, and how credit and debit notes change the buyer's input tax credit.

The time limit for credit notes

Under section 34, a credit note must be declared in your return for the month (or quarter) in which it is issued, and not later than the earlier of:

• 30 November following the end of the financial year in which the original supply was made, or
• the date you file the annual return for that year.

A second condition: the supplier can reduce their tax only if the tax on that amount has not been passed on to anyone else. In plain words, the customer must actually get the benefit of the reduction.

A worked example

Goods were sold on 20 Feb 2027, in financial year 2026-27. The buyer finds a shortage in September 2027.

1. The supply was in 2026-27, so the last date is 30 Nov 2027 (or the date the 2026-27 annual return is filed, if that is earlier).
2. The supplier issues credit note CN/27-28/011 on 25 Sep 2027 and shows it in the GSTR-1 for September 2027.
3. To stay safe, do not leave it to the last week. A note issued in November may only go into a return filed in December, which can be too late. Ask your accountant how they treat it.

After the time limit you can still give the customer a commercial credit note without GST: it settles the account between you, but your output tax is not reduced.

Debit notes and input tax credit

There is no time limit for the supplier to issue a debit note: tax owed must be paid. For the buyer, input tax credit on a debit note must be claimed by 30 November following the end of the financial year in which the debit note is dated (or the annual return date, if earlier). The year of the original invoice does not decide it.

What the buyer must do with a credit note

When a supplier issues a credit note, the buyer's input tax credit for that invoice falls by the tax on the note. The credit note appears in the buyer's GSTR-2B, and their available credit is reduced. The buyer can see and act on it in the Invoice Management System (IMS) on the GST portal. If the buyer rejects the credit note there, the supplier's tax is not reduced by it, so talk to the buyer before you issue it.

Checklist before the last date

• List returns, rate disputes and shortages pending for last year by October.
• Issue the notes and tell the buyers the numbers.
• Make sure each note goes into a return before the deadline.
• Set the status in the maker to Adjusted in account or Refunded when it is settled.