31 May 2024
Sir, One of my client received 10 mobile tab as sales promotion under a credit note. This credit note specifically mentioned that it was sales promotion expense and TDS was deducted under section 194R and no GST was collected in that credit note. Then I want to provide these mobile tab to one of my customer under a credit note which was in excess of Rs. 20,000. Then I want to know whether the credit note I am proposing to issue was liable for GST or Can I issue the same without GST in the same way as issued by the supper. But I think I would definitely required to collect TDS under section 194R in the credit note I am proposing to issue. Please clarify regarding the GST Applicability and TDS
11 July 2024
In the scenario you've described, let's address the GST (Goods and Services Tax) applicability and the TDS (Tax Deducted at Source) under section 194R for the credit note you intend to issue:
### GST Applicability:
1. **Original Credit Note Received:** - Your client received 10 mobile tabs as a sales promotion expense under a credit note. - No GST was collected on this credit note, indicating that the transaction was treated as non-taxable or exempt under GST, likely due to its nature as a sales promotion.
2. **Credit Note Issuance to Customer:** - You want to provide these mobile tabs to your customer under a credit note. - If the value of this credit note exceeds Rs. 20,000, GST applicability needs to be determined. - Since the original supply (from your client to you) did not attract GST and was treated as a sales promotion expense, your credit note to the customer should also not include GST.
### TDS under Section 194R:
- Section 194R pertains to TDS on payments of income in respect of units of a mutual fund specified under Section 10(23D). It does not seem directly applicable to the scenario described (providing mobile tabs as sales promotion).
- However, if TDS under Section 194R was deducted by your client when providing you with the mobile tabs (as part of the sales promotion), and you are now issuing a credit note to your customer, you do not need to deduct TDS again under Section 194R. TDS under Section 194R is typically deducted by the payer (your client) on the payment made to the payee (you), if applicable. Since you are now passing on the mobile tabs to your customer under a credit note, the TDS deducted by your client should already have been accounted for.
### Conclusion:
- **GST:** Given the nature of the original transaction as a sales promotion where no GST was collected, your credit note to the customer for the mobile tabs can also be issued without GST, assuming the value exceeds Rs. 20,000 and no other taxable supply conditions apply.
- **TDS:** There is no need to deduct TDS under Section 194R again when you issue the credit note to your customer. The TDS, if already deducted by your client, should have been accounted for in their books.
Ensure to maintain proper documentation and clarity in the credit note issued to your customer, stating that the supply is related to the mobile tabs received under the sales promotion credit note from your client.
CAclubindia
