A credit note in GST is a document issued by a supplier of goods or services to the recipient, signifying a full or partial return of funds. It is issued when there is a discrepancy in an existing tax invoice, such as an incorrect amount, or when a buyer returns goods or services. A credit note can be issued by any goods and services supplier who has registered under GST. The issuance of a credit note can allow the supplier to decrease their tax liability in the returns without requiring them to undertake any tedious process of refunds.

According to the Central Board of Indirect Taxes and Customs (CBIC), a credit note can be issued in the following situations:

• The taxable value or tax charged in the tax invoice is found to exceed the taxable value or tax payable in respect of such supply.
• The goods supplied are returned by the recipient.
• The goods or services supplied are found to be deficient.
• The recipient is entitled to a discount on the original invoice value.

A credit note must contain certain particulars, including the name, address, and GSTIN of the supplier, the nature of the document, a unique serial number, and the date of issue. The person who issues a credit note must declare the details of such credit note in the return for the month during which it has been issued but not later than September following the end of the financial year.

In summary, a credit note in GST is a document issued by a supplier of goods or services to the recipient, signifying a full or partial return of funds, and it is issued in various situations such as when there is a discrepancy in an existing tax invoice or when a buyer returns goods or services.