Credit Note Singapore: Steps to issue, Format, and Requirements

Singapore’s Goods and Services Tax (GST) framework requires businesses to submit accurate returns and payments in compliance with the Inland Revenue Authority of Singapore (IRAS) guidelines. Among the details required to determine the accurate GST liability, a credit note is a crucial financial instrument for businesses to document and adjust their tax liabilities when goods are returned for some reason.

Credit notes play a significant role in ensuring accurate tax reporting by modifying the taxable amount in cases of invoice adjustments.  Unlike many other countries where credit notes are not strictly regulated, Singapore has specific IRAS guidelines governing their issuance and use. 

To make things easier, we have prepared this credit note guide. It covers credit notes, their purpose, the details required per IRAS, and, most importantly, how to create a credit note in Singapore.

Credit Note Invoices in Singapore

A  credit invoice or negative invoice is a document that reduces the amount a buyer needs to pay. The credit note lowers the total payable amount by the specified value. A credit note is typically issued when goods are returned due to errors, defects, customer dissatisfaction, or pricing discrepancies. Instead of providing a cash refund, businesses use credit notes to adjust outstanding amounts, which can be applied to future transactions or invoices.

Credit notes can be created manually on accounting or electronically as per InvoiceNow e-invoicing to bill the government. The electronically generated credit invoices are called e-credit notes and can be issued or managed through systems like GeBIZ and Vendors@Gov (for Government Vendors).

Wih Singapore’s e-invoicing mandate  starting 2026, all credit invoices would need to be issues electronically through InvoiceNow Solutions.

Purpose of Credit Notes

A credit note fixes errors or changes in the value of supply and adjusts the payments in the books of accounts. 

This helps to keep the financial records accurate and helps report the correct GST at the end of the accounting period.  Credit notes are used to fix invoice errors like overcharging or incorrect item listings.

• They are issued when customers return defective or damaged products.
• Mistake in calculation or classification of items resulting in amount or GST  reduction
• They adjust invoices when discounts are not applied correctly.
• For refunding advance payments if the customer cancels the purchase.
• They handle warranty claims for defective products.
• To offset payments for damaged or incorrect supplier goods.
• They resolve payment discrepancies between owed and paid amounts.
• Refund customers for canceled orders before delivery.

IRAS’ Credit Note Requirements

The Inland Revenue Authority of Singapore has mandated the inclusion of certain details on a credit note to maintain the regularity and legitimacy of all credit invoices.

A credit note should have the following details:

• A unique identification number, such as a serial number or invoice number, along with a reference of the original invoice number
• The date it was issued
• Your business name and address
• GST registration number
• Your customer’s name and address
• The reason for issuing the credit note invoice
• A clear description of the goods or services being credited
• The quantity and amount credited for each item
• The total credited amount before tax
• The applicable tax rate and credited tax amount
• The total credited amount, including tax

If the original tax invoice number and date are not available, then you must keep other records to prove that GST was accounted for in the original sale.

How to Issue a Credit Note in Singapore

To issue a credit note, follow the following steps:

Step 1: Determine the Need for a Credit Note

Before issuing a credit note, confirm the reason for doing so. Common reasons include:

• Overcharging or incorrect pricing on the original invoice.
• Goods returned because of defects or dissatisfaction.
• Cancellation of services or adjustments in service charges.
• Discounts or rebates are provided after issuing the invoice.

Step 4:  Gather Required Information

The necessary information needed for a credit note, as discussed above, include:

• Original invoice number and date.
• Customer details
• Supplier details
• Description of the goods
• Amount to be credited, including and excluding GST.
• Reason for issuing the credit note.

Step 3: Prepare a Credit Note

Following the template example above, prepare a credit note including GST treatment.

Step 4: Issue the Credit Note

You can send the prepared credit note to the customer via email or mail. Maintain a copy of your business records to track financial adjustments. 

Steps to issue credit note after GST InvoiceNow mandate: After GST e-invoicing implementation in Singapore, the credit notes must be issued via the InvoceNow solution.

Credit Note Sample Singapore

To understand how to issue a credit note invoice, have a look at the credit note template below:

How GST is Treated on Credit Notes

Adjustments related to credit notes should be reflected in the GST F5 return for the accounting period in which the credit note is issued.  The adjustments apply to:

• Box 1: Value of standard-rated supplies
• Box 6: Output tax due

However, there are certain exceptional cases when a GST F7 form would be needed to file the returns. The related exceptions are:

• If the credit note corrects an error, such as applying the wrong GST treatment.
• If the conditions for correcting errors in the next GST F5 return are not met.

Also, when you file the GST returns, the key considerations before making adjustments are:

• Ensure GST was correctly reported in earlier returns.
• If errors are found in past returns, they must be corrected.
• For credit notes related to customer accounting supplies, refer to the e-Tax Guide on GST: Customer Accounting for Prescribed Goods for specific guidance.

Conclusion

Credit notes, just like business invoices, are very important for maintaining accounting records. It is important to make sure that credit notes are handled correctly in both your financial records and GST returns. If errors or mistakes without intent are found in your GST filings, IRAS can impose penalties like:

• 200% of the undercharged tax
• Fines of up to $5,000
• And even imprisonment of up to 3 years.

So, along with credit adjustments for your books, also make sure that the adjustments are accurately reflected in your GST F5 return under the right headings and treatments.