Issuance of Credit note to be issued by us since we overpriced the invoice

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This query is : Resolved

ARUN GUPTA (Querist)

02 May 2023 Can we issue credit note to our customer as we over priced them by mistake. Our item have 5% gst. How will we show gst in the credit note? Our item is cloth and price charged was Rs35/ per metre. We over priced.. 50p per metre excess? How will we write in the credit note? Total cloth supplied was 30000 metres by eway bill. What will we mention in the credit note for correction of overpricing? Please give the complete format of credit note?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

09 July 2024 Certainly! Issuing a credit note to correct an overpricing mistake is a standard practice in business. Here’s how you can prepare a credit note for the overcharged amount, including the GST details:

### Format of Credit Note

**[Your Company Letterhead]**

**Credit Note No.: [Enter Credit Note Number]**
Date: [Date of Issuance]

| Details | Description |
|----------------|--------------------------------|
| **Seller:** | [Your Company Name] |
| **GSTIN:** | [Your GSTIN] |
| **Buyer:** | [Buyer's Name and Address] |
| **Invoice No.:** | [Original Invoice Number] |
| **Invoice Date:** | [Original Invoice Date] |
| **Credit Note No.:** | [New Credit Note Number] |
| **Credit Note Date:** | [Credit Note Issuance Date] |

| **S. No.** | **Description** | **HSN/SAC Code** | **Quantity** | **Rate** | **Amount** | **GST Rate** | **GST Amount** | **Total** |
|------------|--------------------------------|------------------|--------------|----------|------------|--------------|----------------|-----------|
| 1 | Cloth (Description) | [HSN Code] | 30,000 mtrs | Rs. 35 | Rs. 10,50,000 | 5% | Rs. 52,500 | Rs. 11,02,500 |
| 2 | Overcharged amount (50p/metre) | [HSN Code] | 30,000 mtrs | Rs. 0.50 | Rs. 15,000 | 5% | Rs. 750 | Rs. 15,750 |

**Total Invoice Amount:** Rs. [Total Amount from Original Invoice]

**Total Credit Note Amount:** Rs. [Total Amount of Credit Note]

### Explanation:
- **Seller:** Your company's name and GSTIN.
- **Buyer:** Buyer's name and address.
- **Invoice No. and Date:** Original invoice details that are being corrected.
- **Credit Note No. and Date:** New credit note details correcting the overpricing.
- **Description:** Clearly state the item (cloth), HSN/SAC code, quantity, rate per metre, and total amount from the original invoice.
- **Overcharged amount:** Specify the additional amount charged per metre in error (50 paise per metre).
- **GST Details:** Mention the applicable GST rate (5% for cloth) and calculate the GST amount on the overcharged amount.

### GST Treatment:
- The GST treatment on the credit note should mirror the GST treatment on the original invoice.
- Since the original invoice had cloth with a 5% GST rate, the credit note will also reflect a 5% GST rate on the overcharged amount.
- Calculate the GST amount (5% of the overcharged amount) separately and include it in the credit note.

### Declaration:
- Include a declaration stating that this credit note is being issued for the correction of overpricing as per mutual agreement and complies with GST laws.

### Note:
- Ensure the credit note number and date are sequential and unique to maintain proper records.
- Provide copies of both the original invoice and the credit note to the buyer for their records and reconciliation.

By following this format, you ensure transparency and compliance with GST regulations while correcting the overpricing mistake.

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