Credit Note to foreign buyer

[Kaustubh Karandikar]

XYZ supplied goods for export without payment of GST under LUT. The customer made the payment against the same at an early date than the stipulated and therefore asked for a reduction in the amount to be paid by him to XYZ. Therefore, XYZ issued a credit note with a description ‘Towards interest cost of early payment’. Is XYZ liable to pay GST under reverse charge on the amount of credit note?

AI Summary

XYZ Issues Credit Note for Early Payment; No GST Due Under Reverse Charge for Exported Goods via LUT. XYZ supplied goods for export under a Letter of Undertaking (LUT) without paying GST. The foreign buyer paid earlier than expected and requested a reduction in the amount due. Consequently, XYZ issued a credit note labeled 'Towards interest cost of early payment.' Queries arose about GST liability on this credit note under reverse charge. Respondents concurred that since the goods were exported without IGST, XYZ can issue a financial or commercial credit note without GST, and thus no GST is payable on the credit note.