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?

[Rajagopalan Ranganathan]

Sir,

Since the goods are supplied for export without payment of IGST, the supplier can issue Financial/Commercial credit note without GST. Since Financial/Commercial credit note without GST is to be issued no GST is payable. Moreover as mentioned by you the credit note is issued towards interest cost of early payment.

[KASTURI SETHI]

I am also of the same views as opined by Sh.Ranganathan, Sir.

AI Summary

Zero-rated export supply: credit notes for early-payment interest do not attract GST under reverse charge mechanism when issued as financial/commercial credit.
Where goods were exported under a Letter of Undertaking as a zero-rated export supply, a credit note described as interest for early payment is treated as a financial/commercial credit note and may be issued without GST; no GST liability arises on that credit note under the reverse charge mechanism in the stated facts.