Credit Notes
Credit Notes That Follow Every Cancel, Return and Refund
A cancelled or refunded order needs a GST credit note, and it is easy to forget. Mercayo issues it automatically, at the moment of the cancel, the returned parcel or the refund, for exactly the amount taken back.
- In every plan
- Free for 14 days
Kosha is a demo store on Mercayo. Its products, orders and customers are sample data.
In short
What It Does
Mercayo issues a GST credit note on its own, once per event, when an order that has an invoice:
- is cancelled, by your team, by the shopper from their order page, or by the optional clean-up of unconfirmed orders;
- comes back undelivered (returned to origin, or RTO), whether the courier's update marks it or your team does;
- is refunded, in full or in part, once the refund is accepted: when Razorpay has taken it, or at once for a refund recorded as paid in cash or by bank, or given as store credit.
Exactly What Was Taken Back
The note credits exactly what the event took back, and never more than the invoice has left:
| Event | What the Credit Note Covers |
|---|---|
| A cancel or a returned parcel | Everything on the invoice not credited yet: every line, the delivery and the fees |
| A refund of chosen items | Those lines and quantities, and the delivery and fees if you refunded them |
| A refund of a custom amount | That amount, spread over what is left of the invoice's lines and charges, so the parts add up to the paisa |
A repeated event, such as a payment notice that arrives twice, never makes a second note: it finds the note already issued. When nothing is left to credit (a refund after a cancel already credited everything), no empty note is made.
A Proper GST Document
Each credit note has:
- its own gapless number series per financial year, CN/2627/00001 to start with, starting again on 1 April by India's clock;
- the original invoice's number and date, and the same supplier, recipient and place of supply;
- each line credited with its HSN code, taxable value and tax, with CGST and SGST split exactly as the invoice did (or IGST), so the notes and the invoice always reconcile;
- the reason: cancelled, returned undelivered, refund or return.
The credit note that credits the last of an invoice also carries its round off, so the notes add up to exactly what the shopper paid. Once issued, a credit note is frozen like an invoice: nobody can edit or delete it.
Where You Find Them
Credit notes appear on the order page under the invoice, in the GST Invoice card's Credit Notes list, each with its number, date, reason and PDF. The refund dialog tells you before you confirm: "credit note CN/2627/00012 will be issued". The shopper sees the same notes on their order page, each with its own download.
For your store
Why It Matters
Without a credit note, a cancelled sale still counts in your GST return, and you pay tax on money you never kept. Cash on delivery makes this a real cost in India: with invoices issued on confirmation, every refused parcel, every cancelled order and every return was invoiced first, and each needs its note.
Issuing notes by hand is slow and error-prone, especially for part refunds: working out the taxable value and the CGST and SGST of "₹300 off one of three items" by hand, to the paisa, is where spreadsheets go wrong.
Because Mercayo issues the note from the same event that cancelled, returned or refunded the order, your GST records, your refunds and your orders always tell the same story. Your accountant gets clean data: every note numbered in sequence, tied to its invoice, split the same way, and adding up exactly.
And nothing waits on it. If a note ever cannot be issued, the cancel or the refund still goes through for the shopper, and the order's history records the problem so it can be put right.
Step by step
How It Works
Nothing to Switch On
Credit notes follow your invoices. A store that issues GST invoices gets credit notes automatically; a store not registered for GST issues neither. To change the numbering, set the Credit note number prefix in Settings → Invoices → Invoice Numbers (CN/ to start with): up to 6 letters, digits, "-" or "/", different from the invoice prefix.
Cancel an Order as Usual
Press CANCEL ORDER on the order page. The stock goes back, offers are released, any online payment is marked for a refund, and the credit note for the whole invoice is issued in the same step. A shopper's own cancel from their order page, within your cancel window, does exactly the same.
Mark a Returned Parcel
When a cash on delivery parcel comes back, Shiprocket's update marks the order returned to origin on its own; for a parcel you shipped yourself, press RETURNED TO ORIGIN on the order page. Either way, the stock goes back and the credit note follows.
Refund All or Part
Press REFUND on the order page and choose items and quantities, the delivery and fees, or a custom amount. REVIEW shows the credit note that will be issued. Once the refund is accepted (Razorpay has taken it, or you recorded it as cash, bank or store credit), the note is issued for what it took back.
Find It on the Order
The order's GST Invoice card lists its Credit Notes with their numbers, dates, reasons and PDFs. The shopper sees them on their order page too, each with its own download.
Hand Them to Your Accountant
Each credit note names its invoice, so your accountant can match them in GSTR-1: notes against business invoices and against large inter-state consumer invoices are reported note by note, and the rest reduce your consumer sales by state and rate. Download the PDFs from each order for their records.
Your shoppers
What Your Shoppers See
On their order page, under the GST documents, shoppers see each credit note next to the original invoice, with its own download ("CREDIT NOTE CN/2627/00012"). A business buyer's credit notes are in the business's name, like its invoice, so it can reverse its input tax credit correctly.
Settings
Settings You Control
All are under Settings → Invoices → Invoice Numbers.
Mercayo
Mercayo's Controls
Mercayo's team can fix the prefix for a store with a reason your admin shows, and every such change is in Mercayo's audit log. Like invoices, issued credit notes cannot be changed or deleted by anyone, Mercayo included: the database refuses it, and only a further credit note can correct an invoice. The wording on credit notes follows the GST rules and is Mercayo's to maintain for every store. Mercayo never issues, cancels or refunds anything in your store on its own: each note comes from an event in your store.
Limits today
Good to Know Before You Start
- A credit note is issued only for an order that has a GST invoice; unregistered stores issue neither.
- A credit note for a price change or goodwill discount is issued by hand from the order; it never moves money, so pay the shopper separately.
- A refund made in the Razorpay dashboard, outside Mercayo, is not matched to its order and raises no credit note: refund from the order instead.
- Every invoice and credit note is listed on Orders → Invoices and in the GSTR-1 export, as well as on each order.
- The legal time limit for declaring a credit note in your GST returns is not checked by Mercayo.
Questions
About Credit Notes
Do I need to issue credit notes myself?
No. Cancelling, marking a parcel returned to origin, or refunding an invoiced order issues the note in the same step. A shopper's own cancel and the automatic clean-up of unconfirmed orders issue it too, so no event that takes back an invoiced sale is missed.
What about a part refund?
The note credits exactly what the refund took back: the lines and quantities chosen, the delivery and fees if you included them, or a custom amount spread over what is left of the invoice, adding up to the paisa with CGST and SGST equal.
Can a webhook make two credit notes?
No. Each event (a cancel, a returned parcel, a refund) can make one note only; a repeat returns the note already issued. Two refunds of the same order make two notes, one each, but together they never credit more than the invoice.
What if issuing the note fails?
The cancel or refund still goes through, and the order's history records the problem so it can be fixed. The shopper is never kept waiting for their refund because of paperwork.
Does a refund as store credit get a credit note?
Yes. Every refund of an invoiced order goes through the same step, whether the money goes back through Razorpay, in cash or by bank, or as store credit, and the credit note is issued once the refund is accepted.
Why does the last credit note carry the round off?
Because the invoice's total includes its round off, at most 50 paise. When a note credits the last of the invoice, it takes the round off too, so the invoice and its notes add up to exactly what the shopper paid, with nothing left over.
Related
Related Features
- GST InvoicesEvery order gets the right GST document, a tax invoice or a bill of supply, numbered without gaps per financial year, as a PDF for you and your shopper.
- Returns and RefundsLet shoppers ask to return items for a refund; approve, receive and refund from one queue, with the GST credit note issued for you.
- Order Clean-UpOptionally cancel cash on delivery orders nobody confirmed or shipped after the days you choose, with their stock and coupon uses put back.
- Failed DeliveriesWhen a courier cannot deliver, the case lands in one queue with its reason and deadline: ask for another attempt, send a new address, or call it back.
- OrdersStatus tabs, saved views your team shares, search by number, phone or name, a money summary, bulk actions, and an order page with one clear next step.
More in GST and Invoices: GST Invoices · Tax Settings · HSN Finder · Business (B2B) Invoices · Invoices Screen and GSTR-1 Export
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