Credit Notes and Refunds for Nepal Workshops: Correct an Issued Invoice Without Editing It

Sooner or later every workshop meets the same situation: the bill has already gone out, and then something changes. A customer returns a part they did not need, a job is partly redone for free, or a price was entered wrong. The tempting fix is to open the invoice and change the numbers. That is the one thing a clean set of books cannot allow. The right tool is a credit note.

Why you should not just edit an issued bill

Once an invoice has been issued to a customer, it is a record of what you billed. Quietly rewriting it means the customer's copy, your copy and your VAT figures no longer agree, and nobody can say what the original was. A credit note leaves the original untouched and records the correction beside it, with a date, a reason and a number.

What a credit note is

A credit note is a separate numbered document tied to one issued invoice. It takes value off that invoice — and the VAT inside that value, for a VAT-registered workshop. Whatever the customer still owes goes down; if they had already paid, the difference is handed back as a refund.

A worked example

Take a hypothetical VAT invoice of Rs 11,300: Rs 10,000 of work plus Rs 1,300 of 13% VAT. The customer returns a part worth Rs 2,000, which is Rs 2,260 with VAT, so you issue a credit note for Rs 2,260. (The figures are an illustration.)

In every case the credit note is applied to what is still owed first, and only the part that was already paid is refunded.

Who can issue one

Only an owner or manager can issue a credit note, because it changes what a customer owes. Everyone else with access can see it. A credit note needs a reason, and a refund needs a method and reference such as cash, eSewa, Khalti or bank transfer, so there is always a trail of who corrected what and why. A double click does not issue it twice.

What happens to the VAT

For a VAT-registered workshop, the VAT inside the credited amount is reversed exactly, so the credit note's subtotal plus VAT equals its total to the paisa. A PAN-only workshop has no VAT to reverse. On Premium, the VAT summary report shows each credit note as a negative row in the month it was issued, so the VAT payable for that month is net of credits. Your accountant decides how that feeds your filings.

Parts go back on the shelf

On Premium, where stock is tracked by SKU, you can mark a credited part to be returned to stock, and only the credited quantity goes back. Stock counts stay right without a separate manual adjustment.

Company-billed invoices

If the invoice was billed to a fleet or company on Premium, the credit lowers that company's balance, and the credit ledger records the credit note against the original invoice with the working behind it.

Numbered by fiscal year

Credit notes are numbered in the same Nepali fiscal-year style as invoices, for example CN-2083/84-00001, and the counter restarts at 1 on Shrawan 1, around mid-July. Numbers are sequential, with no gaps.

What a credit note does not do

• It does not undo the whole sale. A fully credited invoice is closed as refunded, and an invoice that has credit notes can no longer be cancelled or have its lines, discount or VAT edited
• It does not restore AMC free visits or member discounts used on the original invoice
• It is a record of the correction, not a tax invoice. MekanikMitra labels the credit note PDF as not a tax document, so ask your accountant what, if anything, you need to file with the IRD

Where to start

Credit notes and refunds are on every plan, including Free Forever. Any owner or manager can issue one against an issued invoice in the workshop app. For the basics of billing first, read our 13% VAT billing guide and VAT bill vs PAN bill. This article is general information, not tax advice.