XYZ Ltd. are procuring material from local supplier against advance license invalidation letter. XYZ are getting benefits from supplier against invalidation viz.
1) Cash discount for immediate payment
2) Invalidation benefit of ₹ 4.5 per kg
3) Rate difference between PO rate and Market rate as on date of supply (This can be receivable or payable).
XYZ will be issuing Debit Note to the supplier for getting these benefits. Is XYZ required to pay GST on the debit note amount?
GST Applicability on Debit Notes: XYZ Ltd. Claims Benefits from Supplier; Depends on Benefit Nature & Invoicing Practices. XYZ Ltd. is procuring materials from a local supplier and receives benefits such as cash discounts, invalidation benefits, and rate differences. XYZ plans to issue a debit note to the supplier to claim these benefits. The discussion addresses whether GST is applicable on the debit note amount. One response suggests that GST may apply to certain benefits, while another indicates that the supplier can issue a credit note with or without GST, depending on specific conditions. The consensus is that GST applicability depends on the nature of the benefits and the supplier's invoicing practices. (AI Summary)
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