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How to make a credit note or a debit note

Checked against the app on 2026-09-07

A note corrects a bill that has already gone out. A credit note reduces what a customer owes you. A debit note increases what a supplier owes you, or reduces what you owe them. Both leave the original bill alone and stand as their own document — that is the point of them.

Before you start

  • Making entries from the app has to be switched on. Otherwise you are told: "Voucher creation is not enabled for this company."
  • Credit notes and debit notes have separate rights. They are two different registers. Being allowed to create one says nothing about the other, and a person may be given the right to view a register without the right to add to it. If the add button is disabled, tap it and read the reason.
  • Your GST ledger mapping must be finished, since a note carries tax the same way a bill does. See How to map your Tally ledgers.
  • Know why you are raising it. A note is a document your accountant and, if it carries GST, the tax office will read. "Goods returned on 4 September against invoice 231" is a reason. "Adjustment" is not.
  • Have the original bill's number. For a credit note it is worth entering, and the next section explains what it does.

Which note do you need

  • A customer returned goods, or you overcharged them → a credit note. It sits against the customer and reduces their outstanding.
  • You are charging a supplier back — short delivery, damaged goods, a rate you were overcharged → a debit note. It sits against the supplier.
  • You simply want to record money received or paid → not a note at all. Use a receipt or a payment. See How to record a receipt.

Both notes are built in the same shape, with one important difference covered below.

Make a credit note

Start from the customer's page and tap the add button, then "Credit Note". Or open the "Credit Notes" register and tap "New Credit Note".

  1. The form opens as "Create Credit Note", with the customer under "Creating credit note for". Check the name.
  2. "Credit Note No." is filled in for you.
  3. Link it to the bill it reverses — see the next section.
  4. Choose how to describe the credit. There are two tabs at the top:
    • "Particulars" — credit an account rather than goods. Tap "Select Ledger Account", pick the account and type the amount. Before you pick one the screen reads "No ledger account selected" and "Tap below to select a ledger".
    • "Items" — credit actual stock coming back. Tap "Add Items", pick the items and set their "Quantity" and "Rate". "Add More Items" adds another. Empty, this tab reads "No items added" and "Tap below to add items from your inventory".
  5. Use "Add tax and discount" if the note carries GST or a discount.
  6. Set the date. It defaults to today; a return that happened last week should carry last week's date.
  7. Tap "Add notes" and write the reason in a sentence.
  8. Check the "Total Amount".
  9. Tap "Create credit note". You get a "Credit Note created" confirmation.

Reopening one later shows "Edit Credit Note", the button reads "Update credit note", and success confirms with "Credit note updated successfully".

Use the Items tab when stock is physically coming back, because that is what puts the goods back into your inventory. Use Particulars when nothing physical moves — a rate correction, a rebate.

Naming the original bill

Near the top of the credit note form is a card reading "Against invoice (optional)". This is the single most useful field on the screen.

  1. Tap the card. The "Select Invoices" screen opens under the heading "Against invoice", showing that customer's bills.
  2. Pick one — only one. Filter with the chips ("Unpaid" and the rest) or search by number.
  3. Tap "Done". The card now shows the invoice number and its date.
  4. To unlink it, tap the small close button on the card.

What it does: the note is recorded as reversing that particular bill, and it is carried into Tally as a reference back to it. The bill's outstanding drops by the note's amount, and anybody reading the customer's account later can see which bill the credit belongs to.

It is optional, and a note without it is still a valid note — the credit goes against the customer generally rather than against one bill. But if you know which bill it is, say so. Finding out six months later is much harder than picking it now.

Debit notes do not have this field. The form has no "against invoice" card, so a debit note is raised against the supplier and its reason lives in the notes you write.

Make a debit note

Start from the supplier's page and tap the add button, then "Debit Note". Or open the "Debit Notes" register and tap "New Debit Note".

  1. The form opens as "Create Debit Note", with the supplier under "Creating debit note for".
  2. "Debit Note No." is filled in for you.
  3. Choose the tab: "Particulars" for an account, "Items" for stock going back to the supplier. On the Items tab, "Add Items" adds them and "Modify Items" changes them afterwards.
  4. Use "Add tax and discount" if the note carries GST.
  5. Set the date and tap "Add notes" to write the reason — for a debit note this is the only place the reason lives, so make it specific. Name the supplier's bill number in it.
  6. Check the "Total Amount" and tap "Create debit note". You get a "Debit Note created" confirmation.

Editing shows "Edit Debit Note", the button reads "Update debit note" and success confirms with "Debit note updated successfully".

Finding notes later

Each note has its own register: "Credit Notes" and "Debit Notes". Both open on "This Month" and can be switched to other months. Search credit notes by customer, debit notes by supplier — the search boxes say so.

What changes for different people and settings

  • Two registers, two rights. A member can be given credit notes and not debit notes, or the reverse. This is deliberate: a credit note reduces what a customer owes you, which is a different kind of decision to charging a supplier back.
  • View and create are separate again. Someone may be able to read a register and not add to it.
  • A party-scope restriction narrows what you see. A member limited to certain customers sees only their notes, and only their invoices in the "Against invoice" picker.
  • Nothing here changes the original bill. The note is its own document. If the bill itself is wrong, editing or cancelling the bill is a different action.
  • Sending a note on WhatsApp is a separate feature your business may or may not have switched on.

When something goes wrong

"Please add at least one item". You are on the Items tab with an empty list. Add an item, or switch to Particulars and credit an account instead.

"Please select a ledger account". You are on the Particulars tab with no account chosen. Tap "Select Ledger Account".

"Ledger amount must be greater than 0". An account is chosen but the amount is blank or zero.

"Total amount must be greater than 0". The note adds up to nothing. Check the quantities and rates.

The invoice you want is not in the "Against invoice" list. It belongs to a different party, or it has not synced from Tally yet, or your access is limited to certain parties. Leave the field empty rather than picking the wrong bill, and write the bill number in the notes.

The register says "No Credit Notes Yet" but you made one. Check the month at the top, and clear the search box.

The note saved but is not in Tally. Saving and syncing are two steps. Open the Tally Sync screen for the real reason — see How to check and fix Tally sync.

You raised a credit note against the wrong bill. Open it, tap the close button on the "Against invoice" card, pick the right one and update. Do it before the note reaches Tally if you can.

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