Debit note/ supplementary invoice - GST rate change

[KrishnaKumar A]

Dear Experts,

I have a query w.r.t Debit note/ supplementary invoice. One of my client charged 5% GST in the original invoice, however actual rate was 12%. Now he want to regularize the same by increasing 7%. I understand that he can do it by issuing Debit note/ supplementary Invoice. There is no change in taxable value, only rate of tax is to be changed. How this can be dealt in GSTR 1 since there is no option to update tax without putting taxable value (for debit note and supplementary invoice) ? Kindly advice.

[Shilpi Jain]

This seems to be a challenge in the existing returns whereby without mentioning taxable value the rate change debit note cannot be disclosed in the returns. Further, even if it is disclosed with the taxable value the rate of 7% is not available in the returns.

The only way out seems to do an amendment to the original invoice (even though that is not a fact) in Form GSTR-1 and issue the revised invoice to the customer.

INterest liability will also exist for the differential amount of tax now paid.

However, in the new returns (Form GST ANX-1) this issue is being addressed where such debit notes can be disclosed with zero being mentioned for the taxable value.

[Shilpi Jain]

Another option which could be tried is to disclose the taxable value as 1 for the taxable value and mention rate of tax as 12% (as 7% rate of tax does not exist) and mention the differential tax amount in the tax column.

say ₹ 100 is the original invoice value - enter Re 1 as taxable value for the dr note in GSTR-1, enter tax rate as 12% then edit the tax amount to ₹ 7.

There will be a minor difference in the taxable value in Form GSTR-9C which can be explained by the auditor if material.

[KrishnaKumar A]

Thank you Shilpi, I understand that complication same time i recognize these are the options we have.

[DR.MARIAPPAN GOVINDARAJAN]

Clear reply by Shri Shilphi.

AI Summary

Client Seeks to Correct GST Error from 5% to 12% via Debit Note or Revised Invoice; GSTR-1 Limitations Noted A client initially charged 5% GST instead of the correct 12% on an invoice and seeks to rectify this by issuing a debit note or supplementary invoice. The challenge is that GSTR-1 does not allow updating the tax rate without altering the taxable value. One suggestion is to amend the original invoice in GSTR-1 and issue a revised invoice, considering interest liability for the tax difference. Alternatively, in the new GST ANX-1 returns, this issue is addressed, allowing zero taxable value for debit notes. Another workaround involves entering a nominal taxable value and adjusting the tax rate and amount.