Commercial Credit Note - GST

[V Bharath]

Dear Respected Members,

I am working in organised retail sector. My concern is about Commercial Credit Note. We purchase goods from supplier and sell to retail customers. We claim supplier towards the discounts given to customers and the supplier pass credit note towards a portion of discount, not 100% of discount.

They passed credit note with out GST saying it is commercial credit note as they can not link the products to the original invoice.

Now, please help me to understand the meaning of Commercial credit note and what is our liability being receiver.

Thanking you all in advance

-- Bharath

[Guest]

There is no such concept of Commercial Credit Note in GST. It is true that every credit Note must be linked to particular Invoice..

Here way out may be that Supplier should allow discount on basic price i.e. excluding GST. Then there would not be any question of GST reversal in Credit Note.

[Ganeshan Kalyani]

supplier paid tax on supply made to you. you have claimed discount component from him which reduces the sale turnover. any downward revision in price of the goods will reduce its tax liability as well. this benefit is passed through credit note. in gst credit has to be issued by a supplier. credit will have tax component along with base price , if supplier wants to reduce his tax liability . this credit will have to be linked with the original tax invoice. the supplier reduces his liability only if you as a purchaser reduce your input tax credit .

in the way your supplier is doing you may also raise credit note on your customers, if you want to take tax benefit.

[V Bharath]

Dear Respected Members,

Please clarify me on my liability if credit note is passed by supplier without GST and they have not linked the Credit note with original invoice? Whether we need to reflect the same in our return and need to pay tax on the Credit note issued by supplier?

Thank you

- Bharath

AI Summary

Commercial credit note practice under GST: credit notes must include tax and be linked to original invoices to affect liability. Issue: suppliers issuing so called Commercial Credit Notes without GST and without linking them to original invoices. Key points: there is no separate legal concept of a commercial credit note under GST; a credit note that reduces taxable turnover should be issued by the supplier, include the tax component, and be linked to the original tax invoice; supplier tax liability reduces only if the purchaser reduces its input tax credit; parties may record discounts on the taxable value exclusive of tax to avoid GST reversal.