Please let me know that how to Issue a credit note to party against Tax Rate Difference.
For Ex.
I have billed a product in wrong tax rate 12% and dispatch.
& later I got that actual tax rate is 5% against billed product.
How to give credit to party in this case?
As per Section 34(1) of CGST Act, 2017, there are four situations for issuing credit note :-
— actual value of supply is lower than that stated in the tax invoice issued previously
— Tax charged in that invoice is higher than that correctly applicable on the supply
— goods supplied are returned by the recipient
— goods or services supplied are deficient
The details of credit notes/debit notes should be declared
- in the return for the month during which they are issued or received;
- OR in the return for any subsequent month.
But, a credit note is required to be issued but not later than on or before 30th day of September following the end of the Financial Year in Which the supply was made OR date of furnishing relevant annual return, whichever is earlier.
And where these is such reduction in tax liability by a credit note, the same is permitted with a corresponding responsibility to ensure that the recipient of supply has made a corresponding downward revision in the claim of tax credit.
Now if the invoice is raised for Rs. 1000 @ 12% (GST = Rs. 120 ) & subsequently rate changed to 5% ( GST = 50) , Credit note should be issued for original invoice i.e. Rs. 1000 @ 12% ( GST = Rs. 120 ) and a fresh invoice for the subsequent rate i.e. 5% should be issued.
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