Mr. Y sell the goods to Mr. X on credit Rs.300000+18% GST, Mr. X is already taken input on such purchase, later mr. Y issued commercial credit note(cash discount) to Mr. X for full amount including GST (Rs.354000), in this case receipent is required to reverse the itc? Supplier is required to pay the output tax if the credit note beneifit is taken in GST return?
Financial credit note issued for only taxable value or invoice value( including GST)?
1.That means financial credit note issued only for taxable value portion not for GST portion?
2.in this case if the supplier is allowed cash discount (commercial credit note) including GST portion, receipent is received cash discount for full value ( including GST portion ie, Taxable value300000+54000GST), receipent is required to reverse the ITC? As per 37(1) of GST Act,already says that discount received can considered as payment, then discount received for GST portion is also considered as payment?
1. Yes Receptient is required to reverse ITC .
2. No Supplier is not required to pay tax , as can reduce his output tax on issue of Credit Note.
Now come to point under what conditions the Supplier can issue Financial Credit Note: In term of Section 15 (3) of CGST , The transaction value for charging GST shall be reduced only , when such discount is mentioned on bill or when there is agreement for such discount before the supply & it is being linked to relevant invoices.
But as in your case the relevant invoice no. is identifiable & it's like whole Invoice is being reversed, so no financial credit note can be issued.
Note : Financial credit note can be issued in case of Turnover Scheme.
For more clarification kindly refer Circular 92/11/2019 GST
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