Credit Notes in GST
GST credit notes are very relevant and it differs from non-gst credit notes. How and what are the differences. Read to learn more.
In the GST regime, the supplier of Goods or Services is required to issue tax invoices mandatorily in every case.
(I) that the value of taxable supply has been excessively charged i.e. the taxable value has been erroneously charged higher in the original invoice.
(ii) that the quantity of goods has been declared higher in the invoice that the actual receipt of goods by the receiver.
(iii) that the rate of GST has been erroneously charged higher than the actual rate of tax
(iv) the quality of the goods or services is not up to the mark as expected by the recipient which requires partial or total reimbursement of the invoice value.
(v) or any other reason by which the invoice value is more than what should have been the actual invoice value :
To correct all the above errors, a credit note is required to be raised by the supplier in favour of the recipient to correct the errors. When a credit note is issued the liability of the supplier gets reduced.
There is no prescribed format of credit note under GST. However, the credit note should contain the following details :
1. Name, address, and GSTIN of the Supplier,
2. Document should indicate that it is a debit note
3. Serial No. of the documents which can be any i.e. numerical or alphanumerical but should not exceed 16 characters and it should be unique for a particular financial year.
5. Name, Address, and GSTIN of the Recipient (GSTIN is mandatory if the recipient is registered)
6. Serial No. and date of the original Invoice in respect of which the debit note is issued.
7. Value of Taxable suppliers, rate of tax, and the amount of tax
8. Signature of the supplier
The supplier must declare the details of the credit note in the return for the month in which such credit note is issued. However, the details should not be declared later than the month of September following the financial year in which such supply was made or the date of furnishing of annual return for the relevant period, whichever is earlier.
By issuing a credit note, the output tax liability of the supplier gets reduced. But the same must be matched with a corresponding reduction in an input tax credit by the recipient in the return for the same period or for next periods.
If there is a matching of the above, the same is communicated to the supplier and if there is any discrepancy in this regard the same is also communicated to the supplier.
The discrepancy can be rectified by the supplier in the next return following the month in which the supplier is informed about the discrepancy.
If the discrepancy can not be rectified by the supplier, the difference is added in the output tax liability of the supplier following the month in which the discrepancy was communicated to the supplier.
The credit note record should be kept and maintained till the end of 72 months from the due date of filing of Annual Return for the year in which the debit note is issued. The credit note record is to be kept at every registered address of the supplier.