Credit Note is issued by seller to buyer when the seller owes money to the buyer. It is issued in following cases:

  1. Value of Invoice reduces -  If seller has made mistake while issuing invoice to buyer and value of invoice reduces after correction of error

  2. Sales Return - When buyer returns goods to seller or is not satisfied with services provided by seller, a credit note can be issued by the seller to the buyer

 Read more - What is Credit Note under GST?