Hello friends, greetings for the day in the current article we will discuss about credit note under GST. In this article we will discuss every aspect of credit note. As per 2(37) of CGST Act credit note means an document issued by a registered person under 34(1).
A supplier has to issue tax invoice in case of supply of goods or services or both however during the course of business there can be possibility of:-
In the above cases the act has provided a facility to issue of credit note for the smooth running of business.Once the credit note has been issued the output tax liability of the supplier will reduce subject to fulfillment of provisions of sec 43.
What is “Credit Note”
In case of tax invoice has been issued for supply of goods or services or both and the taxable value or tax charged exceeds the taxable value or tax payable in respect of such supply or in case where the goods are returned by the recipient or in case of goods or services are of deficient nature the registered person who has supplied such goods or services or both may issue to the recipient “Credit Note”
The person who issues credit note in relation to the supply of goods or services or both must declare the details of such credit note in the return for the month but not later than September following the end of financial year in which supply was made or the date of furnishing of the relevant annual return, whichever is earlier . However it should be kept in mind that “the output tax liability cannot be reduced in cases where credit note has been issued after September”.
CREDIT NOTE- WHAT CGST ACT SAYS?
Matching, reversal and reduction in output tax liability
The output tax liability of the supplier gets reduced once the credit note is issued and it is matched. As per Sec 43 the details of credit note relating to outward supply furnished by a registered person shall be matched:-
The claim for reduction in output tax liability by the supplier that has been matched would be accepted and communicated and where the reduction in the output tax liability exceeds the corresponding reduction in the claim for input tax credit or credit note is not declared by the recipient then the discrepancies would also be communicated.
The duplication in the claim for reduction in output tax liability shall be communicated. In case the discrepancies are not rectified in the month of communication than such amount would be added to the output tax liability of the succeeding month.
In case any amount is added to the output tax liability then he shall be liable to pay interest at the rate specified in sec 50(1).
The records of the credit have to be retained until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records. Where such accounts and documents are maintained manually, it should be kept at every related place of business mentioned in the certificate of registration and shall be accessible at every related place of business where such accounts and documents are maintained digitally
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