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September 18, 2020

GSTN enables delinking of Credit Note/Debit Note from invoice for returns/refunds

by shivam jaiswal in GST

GSTN enables delinking of Credit Note/Debit Note from invoice for returns/refunds

GSTN Portal introduced the utility whereby delinking of Debit and Credit Notes with Individual Tax Invoices has been provided. This was a long-standing demand of the stakeholders who were facing issues of matching each Debit or Credit Note with each individual Tax Invoice raised by the supplier of the goods or services.

A supplier of goods or services or both is mandatorily required to issue a tax invoice. However, during the course of trade or commerce, after the invoice has been issued there could be situations like:

  • The supplier has erroneously declared a value which is more or less than the actual value of the goods or services or both provided.
  • The supplier has erroneously declared a lower or higher tax rate than what was applicable for the kind of the goods or services or both supplied.
  • The quantity received by the recipient is more or less than what has been declared in the tax invoice
  • The quality of the goods or services or both supplied is not to the satisfaction of the recipient thereby necessitating a partial or total reimbursement on the invoice value.
  • Any other similar reasons

In order to regularize these kinds of situations the supplier is allowed to issue a credit note or a debit not as applicable to the recipient.

What do you mean by a Credit Note?

Where a tax invoice has been issued for supply of any goods or services and the following situations arises:

  • taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply
  • goods supplied are returned by the recipient
  • goods or services supplied are found to be deficient

then the registered person, who had supplied such goods or services, may issue to the recipient a credit note containing the prescribed particulars.

What do you mean by a Debit Note?

When a tax invoice has been issued for supply of any goods or services and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services, shall issue to the recipient a debit note containing the prescribed particulars.

Reporting of credit note/debit note under the old return filing system

The reporting of credit/debit notes on the GST portal was made in GSTR-1. Reporting in GSTR 1 was as follows:

Credit note/debit note issued to unregistered persons (B2C supplies):

This was declared in Table ‘9B – Credit/Debit Notes (Unregistered)’. The details required were as follows:

  • Debit/credit note number 
  • Original invoice number
  • Original invoice date 
  • Type (whether debit note, credit note or refund voucher)
  • Value and also whether the supply is eligible to be taxed at a differential percentage of the existing rate of tax, as notified by the government.

Credit note/debit note issued to registered persons (B2B supplies):

This was reported in Table ‘9B – Credit/debit notes (Registered)’. The details required were as follows: 

  • GSTIN of receiver
  • Debit/credit Note No. 
  • Date 
  • Original invoice number (in respect of which credit/debit note is being issued) 
  • Original invoice date
  • Type (whether debit note, credit note or refund voucher) 
  • Value 
  • Supply type (whether inter-state or intra-state) and also if the supply is eligible to be taxed at a differential percentage of the existing rate of tax, as notified by the government.

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Delinking of Credit/Debit Note from Invoice in Form GSTR 1/GSTR 6 or Filing Refund

Recently GSTN has enabled the facility to delink reporting of debit note or credit note corresponding with their original invoice. Until now, original invoice number was mandatorily required to be quoted by the taxpayers, while reporting a Credit Note or Debit Note in Form GSTR-1 (for outward supplies) or Form GSTR-6 (for ISD Returns).

However, now the taxpayers now been provided with a facility on the GST Portal to:

  • Report in their Form GSTR-6, single credit note or debit note issued in respect of multiple invoices
  • Choose the supply type as Regular, SEZ, DE, Export etc., to identify the table to which such credit notes or debit notes pertain.
  • Place of Supply (POS) can be sealed against each credit note or debit note, to identify the supply type i.e. Intra-State or Inter-State (State-wise POS Debit note or Credit notes to be reported)
  • Debit /Credit Notes can be declared with tax amount, but without any taxable value also i.e. if credit note or debit note is issued for difference in tax rate only, then note value can be reported as ‘Zero’. Only tax amount will have to be entered in such cases.

Similar changes have been made while reporting amendments to credit note or debit note.

The Refund Module also encountered several corresponding changes:

During the refund applying process, taxpayers are now able to mention such credit or debit note in the statements (furnished during filing the refund application) even without reporting the appropriate challan number.

The taxpayer would be required to select the document type from a drop-down comprising of invoice/ debit note/ credit note. The change has been provided in the process of filing refund application for Refund on:

  • Export of services with payment of tax
  • On account of goods & services without payment of tax
  • On account of supply of goods or services to SEZ with payment of tax
  • On account of supply of goods or services to SEZ without payment of tax
  • On account of Inverted duty structure

The delinking process would ease the stress of matching Debit and Credit Notes with Individual Tax Invoices and help all Registered Tax Payers to report such Debit and Credit Notes in a hassle-free manner. This would lead to saving of time, effort, and cost thereby promoting the efficiency of an enterprise.

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