How to Enter Credit Note in Tally ERP 9?

Last Updated on

Have you ever prepared Credit Note in Tally ERP 9 .If not, you can learn how to prepare a credit  note in this tutorial. Credit note is an accounting document Issued by the seller to the buyer informing that his account has been credited due to sales return made by him.

For example a buyer bought goods for 1000 and returned goods worth 500.  For seller it is a sales return. He has to return Rs 500 to the buyer or in other words he has to deduct 500 from his account. If the bill includes GST, The same has been entered in the credit note with same gst rate and tax applicable to the returning goods.

In Seller books of Accounts

When a customer returned to the seller,Seller has to account the return as sales return and issue a credit note to the buyer.

In Buyer Books of account

When a buyer is returning goods to the seller.The buyer treat the transaction as purchase return.and have to raise a debit note and send to seller along with returning goods.

Recommend Read: Prepare Debit Note in Tally.ERP 9

Other cases when credit note issued.

  • Expense paid by parties on our behalf.
  • Price difference in sales invoice.
  • Discount given to parties after generating Invoice

Example with stock item

01-07-2016 ABC Ltd a cement dealer sold 1000 Cement bags to Shankar Engineers @ 300/ bag Bill NO 2048.

On 02-07-2016 Shankar Engineers returned 250 bags to ABC Ltd

ABC Ltd raised a Credit Note For sales return and issued to Shankar Engineers.

For entering , you have to activate it from F11 Configuration.

How to Activate Credit Note in tally erp 9?

You should go to the following screen.

F11 Features> Inventory Features

F11 Inventory features are available from almost all screens of Tally.

  • Enable Use debit and credit notes
  • Record credit note in invoice mode: Set yes if required

F11 Features, Statutory Features

Save and accept the Features screen. Credit not voucher will have activated.

How to enter Credit note in Tally?

Now let’s enter the above transaction in Invoice Mode.

Gateway of Tally>Accounting Voucher> Credit Note

Shortcut Key to Access this is  voucher is Ctrl + F8. The voucher will look like this image.

Credit note voucher invoice mode

To enter in Invoice mode,

  • Click on item invoice button for entering with stock item
  • Click on As invoice button to enter as Invoice mode.

Ledger Required for the Entry.

We need the following Ledger Account.

  • Customer (Sundry Debtors) Ledger, This must be already created while you generating sale invoice.
  • Sales Return Ledger

Create a sales return ledger under group sales if not already created. You can use sale ledger also instead of creating a separate sale ledger.

How to create ledger in Tally ERP 9

Now enter all the details as follows in the order mentioned below.

  • Change the date by pressing F2 in which credit note is entered.
  • Original Invoice No: The Invoice number of sale bill.
  • Original Invoice Dt: The date of Sales invoice.
  • Party A/c Name: The name of party who returned the goods.
  • Sales Ledger: The Sales Return Ledger created.
  • Name of Item: The commodity retuned by customer, cement.
  • Enter Quantity rate of the commodity returned.
  • Enter narration if required.

Credit note Invoice mode

Press enter to accept and save.

Credit note entry with GST

Let’s take the same example with GST.

01-06-2018 ABC Ltd Delhi, a cement dealer sold 1000 Cement bags to Shankar Engineers ( Delhi) @ 300/ bag Bill NO 2048. GST rate is 28 % and HSN Code of 2523

On 02-06-2016 Shankar Engineers returned 250 bags to ABC Ltd

ABC Ltd raised a Credit Note For sales return and issued to Shankar Engineers. with CGST 14 % and SGST 14%.

Both Parties are registered in delhi, hence identified as local sale transaction.

Additional ledger required for entering credit note with gst

  1. In the sale invoice you must have included tax ledgers like SGST & CGST For local sale and IGST for interstate sale.For entering credit note  also same ledgers are required.
  2. While creating customer ledger, you must be careful about entering  the right state , type of registration, GSTIN.
  3. Create stock item with GST activated.You can set gst rates at company level, ledger level, group level etc. Set gst rate as per your company requirements.

To enter sales return transaction  with gst in credit note

In the credit note voucher select the party name, original sale bill, sale bill date as explained above.

In addition to the above select the gst tax ledger, CGST & SGST as it is a local sale return.

In case of Interstate return, select the IGST ledger,

At the end of the screen, you will find option ‘Provide GST details‘ make this Yes, you can enter additional details about the sales return as shown below.

additional gst details

  • Select the reason for generating debit note listed in the box.
  • Enter Buyer’s Debit note No.

Here is the screen shot of GST sales return Credit note.

credit note with gst


Entry in Normal mode

To enter credit normal mode you have to disable invoice mode, To do that go to

F11 Featues > F2 Statutory Features

Record credit note in invoice mode: No

deactivate record credit note in invoice mode

Now let’s create this in accounting  mode. In which no stock item involved

Examples of normal mode.

XYZ Ltd is the client of ABC Ltd; and has a 25000 Dr balance in their account due to ABC Ltd. Occasionally XYZ Ltd made the Telephone bill of ABC ltd for Rs 5000.00 and informed that the amount should be reduced from the total balance due to ABC Ltd.

Enter the date 

  • Credit the party ledger
  • Debit the expense paid by party on our behalf.
  • Enter amount.

Credit note normal mode

Press enter to accept and save the screen.

Related Posts

One comment

  • neeta jain



Leave a Reply

Your email address will not be published. Required fields are marked *

Translate »
error: Content is protected !!