Import of Goods under GST_Urgent
This query is : Resolved
25 May 2020
Dear Expert, please resolve my query:
Invoice value at the time of import from China was $5 per unit mentioned in invoice
Goods were cleared from the customs on the basis of this invoice and custom duty/gst was paid.
Later on the import invoice was revised and supplier provides discount of $2 per unit.
Query 1: Whether we can issue debit note to the China party?
Query 2: Whether the debit note will pass through any custom duty?
Query 3: Whether GST have to be charged on this debit note?
Invoice value at the time of import from China was $5 per unit mentioned in invoice
Goods were cleared from the customs on the basis of this invoice and custom duty/gst was paid.
Later on the import invoice was revised and supplier provides discount of $2 per unit.
Query 1: Whether we can issue debit note to the China party?
Query 2: Whether the debit note will pass through any custom duty?
Query 3: Whether GST have to be charged on this debit note?
27 May 2020
Ask for a credit note from the party.
It need not pass through customs.
As the main invoice must not be showing GST, so in the note also no need to show GST.
It need not pass through customs.
As the main invoice must not be showing GST, so in the note also no need to show GST.
27 May 2020
Since the party is China, there is no such GST. The party will give me a letter that the amount have been reduced.
The supplier cannot issue credit note so i can issue debit note and give effect in GST by charging GST on debit note.
Will this be fine?
The supplier cannot issue credit note so i can issue debit note and give effect in GST by charging GST on debit note.
Will this be fine?
28 July 2024
Here's a detailed response to your queries about handling a revised invoice and issuing a debit note in the context of importing goods under GST:
### **1. Issuing a Debit Note to the Supplier**
**Query 1: Whether we can issue a debit note to the China party?**
- **Answer:** Yes, you can issue a debit note to the supplier in China. A debit note is a document sent by the buyer to the seller, indicating a reduction in the amount payable due to various reasons such as discounts, errors, or other adjustments.
### **2. Impact on Customs and GST**
**Query 2: Whether the debit note will pass through any customs duty?**
- **Answer:** No, the debit note itself does not impact customs duty directly. Customs duties are determined based on the original invoice and the declared value at the time of import. The debit note will not alter the customs duty already paid. However, any adjustment in the value of the goods can be reflected in the subsequent accounting and tax filings.
**Query 3: Whether GST has to be charged on this debit note?**
- **Answer:** Yes, GST should be charged on the debit note even if the supplier is located outside India. Here’s how to handle it:
1. **GST on Debit Note:**
- Under GST, a debit note issued for a discount or price reduction is considered a taxable supply. You need to issue a debit note and charge GST on it as per the rates applicable on the original invoice.
- Since the supplier is outside India, you need to issue the debit note and comply with GST regulations in India. GST is applicable on the revised value of goods as per the rules governing imports and GST on imports.
2. **Adjustment in GST Credit:**
- Since the debit note reflects a price reduction, you should adjust the GST input credit accordingly. Ensure that the debit note is properly recorded in your GST returns and any excess GST paid earlier is adjusted or claimed for a refund if applicable.
3. **Documentation:**
- Ensure that the debit note clearly mentions the reason for the reduction, reference to the original invoice, and the amount of discount. Keep all relevant documentation, including the revised invoice and communication from the supplier, for your records.
### **Process to Handle the Debit Note:**
1. **Issue the Debit Note:**
- Prepare a debit note mentioning the revised amount and reason for the adjustment. Include details of the original invoice and the revised amount.
2. **Record the Debit Note:**
- Update your accounting records to reflect the reduced value of the goods. Adjust the GST input credit accordingly.
3. **File GST Returns:**
- Report the debit note in your GST returns. Ensure compliance with the GST regulations regarding adjustments.
4. **Communicate with Customs (if necessary):**
- If there is a significant impact on the value of imports that needs to be rectified with customs authorities, communicate with them accordingly. However, typically, the adjustment is handled internally through GST credit adjustments.
### **Summary:**
- **Debit Note Issuance:** Yes, you can issue a debit note for the reduction in price.
- **Customs Duty Impact:** No direct impact on customs duty, as it is based on the original invoice.
- **GST on Debit Note:** Yes, GST should be charged on the debit note, and the input credit should be adjusted accordingly.
Ensure you maintain thorough documentation and comply with both GST and customs regulations to avoid any issues. If you need further assistance, consulting a tax advisor or GST consultant can provide more tailored guidance for your specific situation.
### **1. Issuing a Debit Note to the Supplier**
**Query 1: Whether we can issue a debit note to the China party?**
- **Answer:** Yes, you can issue a debit note to the supplier in China. A debit note is a document sent by the buyer to the seller, indicating a reduction in the amount payable due to various reasons such as discounts, errors, or other adjustments.
### **2. Impact on Customs and GST**
**Query 2: Whether the debit note will pass through any customs duty?**
- **Answer:** No, the debit note itself does not impact customs duty directly. Customs duties are determined based on the original invoice and the declared value at the time of import. The debit note will not alter the customs duty already paid. However, any adjustment in the value of the goods can be reflected in the subsequent accounting and tax filings.
**Query 3: Whether GST has to be charged on this debit note?**
- **Answer:** Yes, GST should be charged on the debit note even if the supplier is located outside India. Here’s how to handle it:
1. **GST on Debit Note:**
- Under GST, a debit note issued for a discount or price reduction is considered a taxable supply. You need to issue a debit note and charge GST on it as per the rates applicable on the original invoice.
- Since the supplier is outside India, you need to issue the debit note and comply with GST regulations in India. GST is applicable on the revised value of goods as per the rules governing imports and GST on imports.
2. **Adjustment in GST Credit:**
- Since the debit note reflects a price reduction, you should adjust the GST input credit accordingly. Ensure that the debit note is properly recorded in your GST returns and any excess GST paid earlier is adjusted or claimed for a refund if applicable.
3. **Documentation:**
- Ensure that the debit note clearly mentions the reason for the reduction, reference to the original invoice, and the amount of discount. Keep all relevant documentation, including the revised invoice and communication from the supplier, for your records.
### **Process to Handle the Debit Note:**
1. **Issue the Debit Note:**
- Prepare a debit note mentioning the revised amount and reason for the adjustment. Include details of the original invoice and the revised amount.
2. **Record the Debit Note:**
- Update your accounting records to reflect the reduced value of the goods. Adjust the GST input credit accordingly.
3. **File GST Returns:**
- Report the debit note in your GST returns. Ensure compliance with the GST regulations regarding adjustments.
4. **Communicate with Customs (if necessary):**
- If there is a significant impact on the value of imports that needs to be rectified with customs authorities, communicate with them accordingly. However, typically, the adjustment is handled internally through GST credit adjustments.
### **Summary:**
- **Debit Note Issuance:** Yes, you can issue a debit note for the reduction in price.
- **Customs Duty Impact:** No direct impact on customs duty, as it is based on the original invoice.
- **GST on Debit Note:** Yes, GST should be charged on the debit note, and the input credit should be adjusted accordingly.
Ensure you maintain thorough documentation and comply with both GST and customs regulations to avoid any issues. If you need further assistance, consulting a tax advisor or GST consultant can provide more tailored guidance for your specific situation.
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