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

   Open the original sales invoice

   Go to Sales > Invoices and locate the invoice against which you need to raise a credit note. Tap the invoice to open its detail view. You can search by customer name, invoice number, or date range to find it quickly.

2. 2

   Tap "Create Credit Note"

   Inside the invoice detail view, tap the options menu (three dots) and select "Create Credit Note". The credit note form opens with the original invoice number pre-linked and all line items pre-populated for your convenience.

3. 3

   Select items and quantities to credit

   Edit the line items to reflect only the goods being returned. You can reduce quantities, remove certain items, or credit the full invoice amount. The GST reversal is calculated automatically for each item.

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

   Tap "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.