Question ID : 40621

CREDIT NOTES

Mr. A is dealer in electronic goods.He receives credit notes towards certain discounts from his supplier which are predetermined at the time of supply and GST is charges on them. Mr. A has accordingly reversed the input credit towards the credit notes reversed. There are also amounts credited to his account by the supplier towards incentives for achieving higher turnover and no GST is charged on the credit notes. Is Mr. A liable to pay GST on the credit notes? Are the receipts exempt in the hands of Mr. A under GST?

Answer ID : 80473

The discount as received by Mr A is only due to the crossing of limit of turnover. The discount so received is uncertainable at the time of purchases made. Such discounts are being classified as secondary discount. Therefore, the CBIC through Circular No 92/11/2019-GST had been issued in the benefit of the trade and commerce. Point D in the circular states that such discount shall be treated as financial discount. There shall be no effect on ITC. Therefore Mr A need not to do anything for gst. Another query raised is regarding the treatment of such. As per me, such financial credit note shall be treated as indirect income as such discount don't become the part of valuation. Its being stated very well in the circular number i quoted above.

Answer ID : 80506

It is Financial Credit note. Show it in Reconciliation Statement of GSTR 9C

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