TMI Blogcredit noteX X X X Extracts X X X X X X X X Extracts X X X X ..... A Pvt Co. has given bulk purchasing incentive scheme to its distributors/dealers as follows: If any dealer buys goods of ₹ 1 crore or more in FY 2019-20, Company will give Europe Holiday package for couple for 4 days. But after covid 19 situation company decided to give incentive in monetary form in shape of credit note of equivalent amount . What will be GST implication, if any? 2. Can com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany give commercial credit note instead of gst credit note? - Reply By YAGAY andSUN - The Reply = In our view, If it is commercial credit note, then, GST is not required to be charged and reversed accordingly. However, issuance of Commercial/Financial credit note still can be issued (i.e. supplier of the goods) despite of withdrawn of Circular CGST 105 by Circular no. 112 , as issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial/Financial credit note is allowed vide Circular No. 92 which is still active and live. - Reply By KASTURI SETHI - The Reply = This incentive scheme is a sort of quantity discount. It is post-supply (sale) discount.Such discount is allowed provided that your buyer must be in the know of such discount prior to or at the time of supply of the goods. Commercial credit note can be issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Issuing credit note is a method to pass on the discount to the buyer. See Section 15(3)(b)(i) (ii) of CGST Act . It must be linked to invoice. More details are available in the article titled Detailed Note on credit Note authored by Sh.Ganeshan Kalyani. It was published on 26.6.19 in Article Section of TMI. - Reply By Ganeshan Kalyani - The Reply = Sri Kasturi Sir, I am glad to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that you have mentioned about my write-up on the credit note. It encourages me. Thanks Sir. - Reply By Ganeshan Kalyani - The Reply = Dear Querist ,the link to the article is given here. Just click here Detailed Note on Credit Note to read it. - Reply By KASTURI SETHI - The Reply = Dear Sh.Ganeshan Kalyani Ji, With reference to your expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at serial no.3 above, I am selfish ! I saved my labour and time by writing just one sentence instead of a comprehensive reply. Your article contains all solutions to the query of credit notes. I recalled your article. - Reply By Ganeshan Kalyani - The Reply = Thanks Sri Kasturi Sir once again. I recalled my earlier days when you would send me suggestions and suggest corrections wherever I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed error. Thanks for those support Sir. - Reply By janakiram kota - The Reply = The querist has asked two questions- one is the implication of gst in his hands and the second is whether the supplier can issue commercial credit note instead of gst credit note. My view is that if the amount of discount was shown in the invoice at the time of sale and excluded from the value of sale then he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need not reverse the input credit. Assuming that it is a post sale discount and the actual amount of discount was not known at the time of sale was not known (is quite possible) the querist has to reverse the input tax credit as is attributable to the value of the discount. As regards to the methodology adopted by the supplier n issuing the credit note - commercial or gst one has not much relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce here. The supplier and recipient are two independent dealers under the act. Two separate assessing officers would audit the books of the supplier and recipient and they would look into whether there is leakage in the respective auditee's books. So if the querist had availed the input credit in the first instance he has to reverse the proprionate input credit . - Reply By YAGAY andSUN - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply = Incentives cannot be treated as par with Discounts as both are different terms as per the Mercantile Laws. Incentive Scheme always operate at the end of the year when CFAs,Distributors and dealers accounts are being reconciled for checking their eligibility for getting incentives etc. In this scenario, either issuance of commercial credit note or GST Credit note (charging and reversing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC respectively) will do not have any impact as both will be ended up in revenue neutral exercises. - credit note - Query Started By: - CABIJENDERKUMAR BANSAL Dated:- 25-4-2020 Goods and Services Tax - GST - Got 8 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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