Issue of Credit Notes and Debit Notes [Section 34 of the CGST Act. 2017]

Home   /   Issue of Credit Notes and Debit Notes [Section 34 of the CGST Act. 2017]
(1) Issue of Credit Note [Section 34(1)]The registered person who has supplied goods or services or both may issue a Credit Note containing such particulars as may be prescribed to the recipient, in following situation:

(i) where the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or

(ii) where the goods supplied are returned by the recipient, or

(iii) where goods or services or both supplied are found to be deficient.

Further, as per section 34(2), he, shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than

(i) September following the end of the financial year in which such supply was made. or

(ii) the date of furnishing of the relevant annual return,

Whichever is earlier,

and the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.
(2) Issue of Debit Note [Section 34(3) & (4)]The registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed—

Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply.

Further, he shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed.

Explanation. —For the purposes of this Act, the expression “Debit Note” shall include a supplementary invoice.

Example:

 S. No.ParticularsAmount (Rs.)
(1)Taxable value supply of goods for the month of December, 20182,00,000
(2)GST payable on Taxable value of supply of goods @ 18%36,000
(3)Total amount for which tax invoice should have been issued for the month of December, 2017 [(1)+ (2)]2,36,000
(4)Taxable value of supply of goods charged for the month of December, 20182,40,000
(5)CGST+ SGST on Taxable value of supply of goods @ 18% Charged43,200
(6)Total amount charged in the invoice [(4) + (5)] for the month of December, 20182,83,200
(7)(a) Amount for which Credit Note is to be issued [(6)-(3)] i.e. Rs. 47,200 wherein supplier shall reduce his output tax liability for Rs. 7.200 subject to the condition that recipient reduces his tax credit for the same amount i.e. Rs. 7,200. (b) Alternatively, credit note can be issued only for the value of services i.e. Rs. 40,000. In such case supplier shall not reduce his output tax liability and recipient shall not reduce his input tax credit.

Example:

S. No.ParticularsAmount (Rs.)
(I)Taxable value of supply of goods for the month of December, 20182,00,000
(2)GST payable on Taxable value of supply of goods @ 18%36,000
(3)Total amount for which tax invoice should have been issued for the month of December, 2018 [(l)+ (2)]2,36,000
(4)Taxable value of supply of goods charged for the month of December, 20181,60,000
(5)CGST+ SGST on Taxable value of supply of goods @18% charged28,800
(6)Total amount charged in the invoice [(4) +(5)] for the month of December, 20181,88,800
(7)Amount for which Debit Note is to be issued [(3)-(6)] i.e. Rs.47,200. There is no other alternative as less tax has been paid by the supplier.

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