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Credit note

A document issued by a supplier reducing the value of an earlier invoice.

Under Section 34 of the CGST Act a supplier issues a credit note where goods are returned, where the value or tax charged was too high, or where supplies are found deficient. For a pharmacy the common case is an expiry or breakage return to the distributor.

The credit note is issued by the supplier, not by you. Your side of the transaction is to raise the return, match the credit note to the original purchase invoice when it arrives, and reverse the corresponding input tax credit.

Keeping the return, the credit note and the original invoice linked to the same batch is what makes the entry defensible later. Claims are rejected far more often on traceability than on principle — a batch that cannot be tied to a purchase invoice is the single most common reason an expiry claim fails.

A credit note is not the same as writing stock off. Where medicine is destroyed rather than returned there is no credit note, and the input credit reversal stands on your own destruction record.

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Related terms

Expiry returnSending near-expiry or expired stock back to the distributor for credit. Input tax credit (ITC)Credit for GST paid on purchases, set off against GST collected on sales. GSTR-3BThe summary GST return through which tax is paid and input tax credit is claimed. StockistThe distributor that supplies medicines from the manufacturer to retail pharmacies. Purchase invoiceThe distributor's bill — the document every downstream record depends on.

All terms

Batch numberBreakage and damageCDSCOCGST, SGST and IGSTCold chainCredit noteDPCO (Drugs Prices Control Order)Drug licence (Form 20 / Form 21)Expiry returnFEFO (First Expiry First Out)Generic vs branded medicineGSTR-1GSTR-3BHSN codeInput tax credit (ITC)Loose sale (cut strip)MRP (Maximum Retail Price)Narcotic registerNear-expiry stockNPPAPack factor (units per pack)Pharmacist registrationPTR (Price to Retailer)PTS (Price to Stockist)Purchase invoiceRed-border warning labelReorder levelRetail vs wholesale drug licenceReturn to vendor (RTV)Rule 65Rx symbolSalt compositionSchedule HSchedule H1Schedule XScheme goods (free goods)Shortbook (short book)Stock rotationStockist

This glossary is a practical reference for Indian retail pharmacy, not legal, tax or clinical advice. Requirements under the Drugs & Cosmetics Rules are enforced by state drug control authorities and vary; GST treatment should be confirmed with your CA. Verify anything you intend to rely on against the current notified position. As of August 2026.