Issue Credit Notes & Refunds

Learn how to raise a credit note against a sales invoice when goods are returned or a price correction is needed, and apply it to a future invoice.

Step-by-step guide

1. 1

   Go to Sales > Credit Note

   From the main menu, go to Sales > Credit Note. This is the dedicated section for raising credit notes against sales. You can search existing credit notes by customer name, reference number, or date range.

2. 2

   Create a new credit note

   Click Create Credit Note or the add button. The credit note form opens. Select the customer and, if the form supports it, reference the original sale invoice so the credit is linked for audit purposes.

3. 3

   Add items and quantities being credited

   Add the returned or adjusted line items. Enter the correct quantities and prices to reflect only the goods being credited. The tax reversal is calculated automatically based on the applicable tax settings, including GST for Indian businesses.

4. 4

   Add a reason for the credit note

   Select a reason from the dropdown — goods returned, price correction, quality issue, or damaged goods — and add any additional notes. A clear reason helps with auditing and customer communication.

5. 5

   Choose how to handle the credit amount

   Decide whether to refund the amount to the customer's bank account, apply it as a credit balance toward their next invoice, or adjust it against an outstanding due. Khata Tracker tracks the credit balance in the customer's ledger.

6. 6

   Save and share the credit note

   Click Save Credit Note. A PDF is generated that you can share with the customer for their records. The credit note appears in the customer's ledger and in your sales return reports automatically.