Cancelling an invoice vs issuing a credit note

When to cancel

Cancelling suits an invoice that was raised in error and has not yet been acted on — not reported in a return, not used by the buyer for credit. Cancelling removes it as if it were never issued.

Once an invoice has flowed into the tax records, cancelling it cleanly is no longer straightforward, because both sides may already have relied on it.

When to issue a credit note

A credit note is the right move once the invoice is already part of the records: for a return, a post-sale discount, or an overcharge. It reduces the value and tax of the original invoice rather than erasing it.

The credit note references the original invoice and is declared in the return for the period, so the adjustment is traceable on both sides.

How Lekha helps

Lekha records credit and debit notes against the bills they adjust, so a change after issue keeps the two-sided ledger accurate.

Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.

Questions

Can I just cancel a GST invoice?

You can cancel an invoice raised in error that has not yet been reported in a return or used by the buyer. Once it is in the records, a credit note is usually the correct route.

When should I use a credit note instead?

When the invoice is already part of your records and needs to be reduced — for a return, a post-sale discount, or an overcharge. The credit note references the original invoice.

Does a credit note delete the original invoice?

No. It reduces the original invoice's value and tax and is declared separately, so the adjustment stays traceable rather than the invoice disappearing.

This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.

Keep reading

• Credit notes and debit notes under GST
• Revised invoice, explained
• See how Lekha works
• All Lekha guides