Credit Notes and Debit Notes in MyInvois — When and How to Issue Them

Why adjustment documents exist

Once an e-invoice passes the 72-hour cancellation window and becomes final in LHDN's system, it cannot be modified or deleted. But business does not stop being messy after 72 hours. Customers return products, prices get renegotiated, quantities change, and mistakes surface late.

That is where credit notes and debit notes come in. They are the official mechanism for adjusting finalized e-invoices without altering the original document.

Credit notes vs debit notes vs cancellation

Before diving into details, here is how the three correction mechanisms compare:

The key distinction: cancellation erases the document. Credit and debit notes create new documents that adjust the original. Both approaches require LHDN validation.

When to issue a credit note

A credit note (document type code 02) reduces the amount the buyer owes. Issue one when:

1. Goods returned

A customer purchased 100 units but returned 20. You issue a credit note for the value of the 20 returned units.

Example:

• Original invoice: 100 units x RM 50 = RM 5,000 + RM 300 SST = RM 5,300
• Credit note: 20 units x RM 50 = RM 1,000 + RM 60 SST = RM 1,060
• Net amount owed: RM 4,240

2. Price reduction after invoicing

You agreed to a discount after the original invoice was finalized. Perhaps a bulk discount kicked in retroactively, or a pricing error was discovered late.

Example:

• Original invoice: RM 10,000 for consulting services
• Agreed post-invoice discount: 10%
• Credit note: RM 1,000 + applicable tax adjustment

3. Overcharge correction

You invoiced RM 8,500 but the correct amount was RM 7,800. The 72-hour window has passed.

Example:

• Credit note: RM 700 + tax difference, referencing the original invoice

4. Full refund

The customer wants a complete refund for a finalized invoice. Issue a credit note for the full invoice amount. The original invoice remains in the system, but the credit note zeroes out the obligation.

When to issue a debit note

A debit note (document type code 03) increases the amount the buyer owes. This is less common but necessary when:

1. Undercharge correction

You invoiced RM 3,000 but the correct amount was RM 3,500. The 72-hour window has passed.

Example:

• Debit note: RM 500 + applicable tax, referencing the original invoice

2. Additional charges discovered after invoicing

You completed a project and invoiced for it, but later discovered additional billable work (overtime hours, additional materials used, etc.).

Example:

• Original invoice: RM 15,000 for renovation work
• Debit note: RM 2,000 for additional materials + applicable tax

3. Price increase applied retroactively

A contract allows for price adjustments based on material costs, and the adjustment is calculated after the original invoice was finalized.

How to structure a credit or debit note

Credit notes and debit notes go through MyInvois exactly like regular e-invoices. They require the same 55 mandatory fields, with a few critical differences:

Required references

Every credit or debit note must reference the original e-invoice it adjusts:

• Original e-Invoice Reference Number — Your internal invoice number for the original document
• Original e-Invoice UUID — The unique identifier assigned by LHDN when the original was validated

Without these references, LHDN will reject the submission.

Document type code

Line items

The line items on a credit or debit note reflect the adjustment, not the original transaction:

• For a credit note: Line items show the amounts being reduced (returned goods, discount applied, overcharge corrected)
• For a debit note: Line items show the amounts being added (undercharge corrected, additional charges)

Tax recalculation

The tax amounts on the adjustment document must be recalculated based on the adjusted amounts. If you are crediting RM 1,000 on a 6% SST item, the credit note must show RM 60 in tax — not the tax from the original invoice.

Practical example: full workflow

Let us walk through a complete scenario.

Situation: You invoiced a customer RM 12,000 for 120 units of Product A at RM 100/unit. SST at 6% brings the total to RM 12,720. Three days later (after the 72-hour window), the customer reports that 15 units were defective and requests a partial refund.

Step 1: Confirm the 72-hour window has passed (it has — cancellation is not an option).

Step 2: Create a credit note with:

• Document type: 02 (Credit Note)
• Reference: Original invoice number + LHDN UUID
• Line item: 15 units x RM 100 = RM 1,500
• SST: RM 90 (6% of RM 1,500)
• Total credit: RM 1,590

Step 3: Submit the credit note through MyInvois. It goes through the same validation process as any e-invoice.

Step 4: LHDN validates the credit note. A new 72-hour window begins for this document (the buyer can reject the credit note if they disagree with the adjustment amount).

Step 5: Share the validated credit note with your customer.

Net result: The customer's obligation is reduced from RM 12,720 to RM 11,130.

Common mistakes to avoid

1. Issuing a credit note when you should cancel — If you are still within the 72-hour window, cancel and resubmit. It is cleaner than creating adjustment documents.

2. Forgetting the original invoice reference — Credit and debit notes without a reference to the original document will be rejected by LHDN.

3. Wrong tax recalculation — The tax on the adjustment must be independently calculated, not copied from the original invoice proportionally.

4. Using a credit note to correct buyer details — Credit notes adjust amounts, not identity information. If the wrong buyer was invoiced, you need a credit note for the full amount to the wrong buyer, and a new invoice to the correct buyer.

5. Not tracking the adjustment document's own 72-hour window — Credit and debit notes are e-invoices themselves. They have their own validation and 72-hour cancellation period.