diff --git a/pos_next/api/sales_invoice_hooks.py b/pos_next/api/sales_invoice_hooks.py
index 10304f89..75a3d16e 100644
--- a/pos_next/api/sales_invoice_hooks.py
+++ b/pos_next/api/sales_invoice_hooks.py
@@ -141,3 +141,35 @@ def before_cancel(doc, method=None):
 			alert=True,
 			indicator="orange"
 		)
+
+
+def on_cancel(doc, method=None):
+	"""
+	On Cancel hook for Sales Invoice.
+	Roll back coupon usage only after the invoice has cancelled successfully.
+
+	Args:
+		doc: Sales Invoice document
+		method: Hook method name (unused)
+	"""
+	rollback_coupon_usage(doc)
+
+
+def rollback_coupon_usage(doc):
+	"""Restore coupon usage for cancelled invoices that consumed a POS coupon."""
+	if doc.get("is_return"):
+		return
+
+	coupon_code = doc.get("coupon_code")
+	if not coupon_code or not frappe.db.table_exists("POS Coupon"):
+		return
+
+	try:
+		from pos_next.pos_next.doctype.pos_coupon.pos_coupon import decrement_coupon_usage
+
+		decrement_coupon_usage(coupon_code)
+	except Exception as e:
+		frappe.log_error(
+			title="Coupon Usage Rollback Failed",
+			message=f"Invoice: {doc.name}, Coupon: {coupon_code}, Error: {str(e)}\n{frappe.get_traceback()}",
+		)
diff --git a/pos_next/api/test_sales_invoice_hooks.py b/pos_next/api/test_sales_invoice_hooks.py
new file mode 100644
index 00000000..15f2ce90
--- /dev/null
+++ b/pos_next/api/test_sales_invoice_hooks.py
@@ -0,0 +1,74 @@
+# Copyright (c) 2025, BrainWise and contributors
+# For license information, please see license.txt
+
+import unittest
+from unittest.mock import Mock, patch
+
+from pos_next.api.sales_invoice_hooks import on_cancel, rollback_coupon_usage
+
+
+class TestSalesInvoiceHooks(unittest.TestCase):
+	@patch("pos_next.api.sales_invoice_hooks.frappe.db")
+	@patch("pos_next.pos_next.doctype.pos_coupon.pos_coupon.decrement_coupon_usage")
+	def test_rollback_coupon_usage_for_cancelled_invoice(self, mock_decrement, mock_db):
+		doc = Mock()
+		doc.get.side_effect = lambda key, default=None: {
+			"is_return": 0,
+			"coupon_code": "SAVE10",
+		}.get(key, default)
+		doc.name = "ACC-SINV-0001"
+		mock_db.table_exists.return_value = True
+
+		rollback_coupon_usage(doc)
+
+		mock_decrement.assert_called_once_with("SAVE10")
+
+	@patch("pos_next.api.sales_invoice_hooks.frappe.db")
+	@patch("pos_next.pos_next.doctype.pos_coupon.pos_coupon.decrement_coupon_usage")
+	def test_rollback_coupon_usage_skips_invoices_without_coupon(self, mock_decrement, mock_db):
+		doc = Mock()
+		doc.get.side_effect = lambda key, default=None: {
+			"is_return": 0,
+			"coupon_code": None,
+		}.get(key, default)
+
+		rollback_coupon_usage(doc)
+
+		mock_db.table_exists.assert_not_called()
+		mock_decrement.assert_not_called()
+
+	@patch("pos_next.api.sales_invoice_hooks.frappe.db")
+	@patch("pos_next.pos_next.doctype.pos_coupon.pos_coupon.decrement_coupon_usage")
+	def test_rollback_coupon_usage_skips_return_invoices(self, mock_decrement, mock_db):
+		doc = Mock()
+		doc.get.side_effect = lambda key, default=None: {
+			"is_return": 1,
+			"coupon_code": "SAVE10",
+		}.get(key, default)
+
+		rollback_coupon_usage(doc)
+
+		mock_db.table_exists.assert_not_called()
+		mock_decrement.assert_not_called()
+
+	@patch("pos_next.api.sales_invoice_hooks.frappe.db")
+	@patch("pos_next.pos_next.doctype.pos_coupon.pos_coupon.decrement_coupon_usage")
+	def test_rollback_coupon_usage_skips_when_coupon_table_missing(self, mock_decrement, mock_db):
+		doc = Mock()
+		doc.get.side_effect = lambda key, default=None: {
+			"is_return": 0,
+			"coupon_code": "SAVE10",
+		}.get(key, default)
+		mock_db.table_exists.return_value = False
+
+		rollback_coupon_usage(doc)
+
+		mock_decrement.assert_not_called()
+
+	@patch("pos_next.api.sales_invoice_hooks.rollback_coupon_usage")
+	def test_on_cancel_delegates_to_coupon_rollback(self, mock_rollback):
+		doc = Mock()
+
+		on_cancel(doc)
+
+		mock_rollback.assert_called_once_with(doc)
diff --git a/pos_next/hooks.py b/pos_next/hooks.py
index 7b422cf4..8f40e73e 100644
--- a/pos_next/hooks.py
+++ b/pos_next/hooks.py
@@ -190,7 +190,10 @@
 			"pos_next.realtime_events.emit_stock_update_event",
 			"pos_next.api.wallet.process_loyalty_to_wallet"
 		],
-		"on_cancel": "pos_next.realtime_events.emit_stock_update_event",
+		"on_cancel": [
+			"pos_next.api.sales_invoice_hooks.on_cancel",
+			"pos_next.realtime_events.emit_stock_update_event",
+		],
 		"after_insert": "pos_next.realtime_events.emit_invoice_created_event"
 	},
 	"POS Profile": {
@@ -294,4 +297,4 @@
 # }
 
 
-website_route_rules = [{'from_route': '/pos/<path:app_path>', 'to_route': 'pos'},]
\ No newline at end of file
+website_route_rules = [{'from_route': '/pos/<path:app_path>', 'to_route': 'pos'},]