Tax Consultant
1878 Points
Posted on 15 September 2026
Sales returns in GSTR-3B depend on whether the credit note reduces taxable turnover or involves ITC recovery.
For credit notes issued to customers (reducing your outward supply):
- Report in Table 3.1 of GSTR-3B as a negative adjustment to outward taxable supplies. The net taxable turnover after credit notes goes in Table 3.1(a) or 3.1(b) depending on whether it is intra-state or inter-state.
- Do NOT show it in Table 4 (ITC side) , that is for your inward supply corrections.
For sales returns where goods come back and you are reversing the original invoice:
- Same treatment: issue a credit note, reduce the output tax liability in Table 3.1 for the period when the credit note is issued (not the original invoice period).
- The supplier (your customer) must reverse the ITC they claimed on the original invoice , that is their responsibility, not yours.
Common mistake to avoid: adjusting credit notes in the ITC section (Table 4) instead of output liability (Table 3.1). That results in an incorrect ITC balance and mismatched liability reporting.
This [GST credit notes under 2026 rules guide](https://taxgarden.in/blog/gst-on-export-of-goods-india-zero-rated-lut-refund-procedure-2026) has the related adjustments if any export invoices are involved.