Reason of issue of credit note
• The supplier has erroneously declared a value which is
more than the actual value of the goods or services provided.
• The supplier has erroneously declared a higher tax rate
than what is applicable for the kind of the goods or services or both supplied.
• The quantity received by the recipient is 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 what is called as credit note to the recipient. Once the credit note has been issued, the
tax liability of the supplier will reduce.
Format of credit note
There is no prescribed format but credit note issued by a
supplier must contain the following particulars, namely:
(a) name, address and
Goods and Services Tax Identification Number of the supplier;
(b) Nature of the document;
(c) a consecutive serial number not exceeding sixteen
characters, in one or multiple series, containing alphabets or numerals or
special characters hyphen or dash and slash symbolised as “-” and “/”
respectively, and any combination thereof, unique for a financial year;
(d) Date of issue;
(e) Name, address and Goods and Services Tax Identification
Number or Unique Identity Number, if registered, of the recipient;
(f) Name and address of the recipient and the address of
delivery, along with the name of State and its code, if such recipient is
un-registered;
(g) Serial number and date of the corresponding tax invoice
or, as the case may be, bill of supply;
(h) Value of taxable supply of goods or services, rate of
tax and the amount of the tax credited to the recipient; and
(i) Signature or digital signature of the supplier or his
authorised representative.
Reason of issue of Debit note
The supplier has erroneously declared a value which is less
than the actual value of the goods or services or both provided.
• The supplier has erroneously declared a lower tax rate
than what is applicable for the kind of the goods or services or both supplied.
• The quantity received by the recipient is more than what
has been declared in the tax invoice.
• Any other similar reasons.
In order to regularize these kinds of situations the
supplier is allowed to issue what is called as debit note to the recipient. The
debit note also includes supplementary invoice.
Tax liability
The issuance of a debit note or a supplementary invoice
creates additional tax liability. The treatment of a debit note or a
supplementary invoice would be identical to the treatment of a tax invoice as
far as returns and payment are concerned.
Records
The records of the debit note or a supplementary invoice
have to be retained until the expiry of seventy two months from the due date of
furnishing of annual return for the year pertaining to such accounts and
records. Where such accounts and documents are maintained manually, it should
be kept at every related place of business mentioned in the certificate of
registration and shall be accessible at every related place of business where
such accounts and documents are maintained digitally.
Invoice in case of continuous supply of goods
In case of continuous
supply of goods, where successive statements of accounts or successive payments
are involved, the invoice shall be issued before or at the time each such
statement is issued or, as the case may be, each such payment is received.
Invoice in case of continuous supply of services
In case of continuous supply of services, where:
(a) The due date of payment is as certain able from the
contract, the invoice shall be issued on or before the due date of payment.
(b) The due date of payment is not as certain able from the
contract, the invoice shall be issued before or at the time when the supplier
of service receives the payment.
(c) The payment is linked to the completion of an event, the
invoice shall be issued on or before the date of completion of that event.
Issue of invoice in case, where supply of service ceases under a
contract before the completion of supply
In a case where the
supply of services ceases under a contract before the completion of the supply,
the invoice shall be issued at the time when the supply ceases and such invoice
shall be issued to the extent of the supply made before such cessation
Sale on approval basis
Where the goods being sent or taken on approval for sale or
return are removed before the supply takes place, the invoice shall be issued
before or at the time of supply or six months from the date of removal,
whichever is earlier.
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