Credit Note under GST

GST Credit note is used to reverse proportionate amount of the GST Tax amount in addition to the value of the goods and services. It can be issued by the supplier only. Even though on monthly basis credit notes needs to be reflected in the GST Return. Reflection of the GST can not be later than date of furnishing of annual return or 30th September of the succeeding Financial Year. GST Tax liability is reduced with issue of the GST Credit Note.

Credit note is issued in case of the deficiency in the tax invoice. Get help from the Profesional Utilities to solve any problem related to the GST.

Table Of Content

What is GST credit note?

GST Credit Note refers to the documents in the business transaction which is used in the context of GST invoice to the issued to recipient where excessive or incorrect GST Invoice has been issued. GST Credit Note helps in the reconciliation with the original invoice of the tax liability.

Credit note in the Sales Return

Detail about the credit note are mentioned in GSTR 1 of the preceding month.
Detail about the credit note are customer’s GSTIN, original invoice number, invoice date.
GST Credit Note are issued when GST return is due or All tax returns for one fiscal year must be submitted by September of the year after the financial year.

GST Credit note in GSTR3B

GSTR-3B is filled on the monthly basis by the registered person. It is the summary of the input tax credit, outward supplies and payment of the tax.

There is no seperate column for the refection of the detail of credit note issued. It record only net tax receipt in the tile ‘Details of outward supplies and inward supplies liable to reverse charge'. It is handled as an adjustment to the tax due by deducting it from the total taxable value.

As there is no separate column for the credit note. The registered person either forget credit note entries or there is mistake in GST Credit note entries.

Content of the GST Credit Note

There certain elements that are included in the GST Credit Note as mentioned below -

GSTIN (Goods and Services Tax Identification Number) of the supplier, Name, address.
Date of issuance of the credit note
Unique for a financial year, a consecutive serial number containing only alphabets and/or numerals.
GSTIN or Unique Identity Number, name, address and of buyer.
In case of the unregistered recipient name and delivery address along with the name of State and its code
Date of the corresponding tax invoice or, as the case may be, bill of supply and serial number against which the credit note is being issued.
Rate of tax and amount of tax credited to the recipient, the taxable value of goods or services or, depending on the situation, debited to the receiver.
Digital signature of his authorized representative or supplier.

GST Credit note under GST Time limit

Time limit to issue GST Credit Note is not mentioned. Even though maximum limt are declared which is earlier of the two as mention below -

The actual date when the yearly return for the relevant period was due.
30th September of the following year in which such supply was made.

Why GST Credit note is issued?

All tax returns for one fiscal year must be submitted by September of the year after the year in question,

Deficiency in services provided or Sales Return - Sales return on account of the service rejection, quality issues or demaged goods receipt.
Value of the invoice reduces – When quantity of the tax invoice is less than quantity received by the customer, discount of post sale is given by the buyer, post sales discount given to the buyers.

Conclusion

Credit note is made to rectify the mistake of the excess taxable value, from the total taxable value amount of credit note are deducted. Credit Note are issued due to the change in the value of the invoice and change in value of the goods. They need to be filled in the sales return either on the monthly basis and annual basis.

Frequently Asked Questions

What is done with a GST credit note?

A GST credit note is a credit note that reverses the value of the goods and services for which it is to be issued, as well as the proportionate amount of GST tax. Only the provider of goods and services should be authorised to issue GST Credit notes.

What does a sales tax credit note mean?

To ensure that the product return is accepted, the vendor issues a credit note. From the standpoint of the buyer, it can only be issued in the case of credit transactions. It can only be granted if there are credit sales.

Describe the credit note using an example?

credit note is used by the provider to add the matching sum to the client's account. The value of the returned products, for instance, could be credited back to the customer's account in this manner.

What is distinguishes between an invoice and credit note?

Credit notes and invoices are official records that are used in commercial accounting together.
credit notes are provided to cancel an invoice or demonstrate a refund of fund.
Invoices are issued to demonstrate that payment is due.