Debit / Credit Notes-Container Detention Charges

[Guest]

One foreign supplier will compensate us towards container detention charges. Should we require to raise Debit Note or They will raise Credit Note. Any Tax -customs duty impact with HSN code.

Please guide

Rgds

[YAGAY andSUN]

In our view, it is the supplier responsibility to issue a credit note. Further,if such reimbursement is incorporated in the agreement then no customs duty will be paid by you on such receipt.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Yagay.

[Guest]

Many thanks Sirs for guidance

One point is not clear- Why there will be customs duty on compensation amount (towards detention cost of container beyond 5 days free time). Based on Shipping Line's claims, Foreign exporter will issue credit note on Indian importer and remit the amount by TT mode. Here how Customs Dept will fit in to . They will not come to know about this commercial decision. there could be income tax / GSt issue -that you may please guide me. Rgds

[KASTURI SETHI]

Compensation is not income.

AI Summary

Foreign Supplier Should Issue Credit Note for Container Detention Charges; No Customs Duty if Reimbursement Agreed A discussion on a forum addressed whether a debit or credit note should be issued for container detention charges compensated by a foreign supplier. The consensus was that the supplier should issue a credit note. It was noted that if the reimbursement is part of the agreement, no customs duty would apply. Concerns were raised about potential income tax or GST implications, but it was clarified that compensation is not considered income. Participants sought guidance on the role of customs in such transactions, emphasizing the commercial nature of the decision.