Dear Seniors and Colleague
I need your advice on Creditors/Debtors balance adjustment without payment..
1. Our creditors are agree to give Credit note to waive off all the outstanding without any GST effect means 'Financial Credit Note'
2. Similarity our debtors are also not in a position to pay and we accept to issue Credit Note from our Side without any GST effect means ' Financial Credit Note.'
What should precautions we have to take and what type of documentation we have to maintain for that.
Please suggest with refering some laws.
Issuing Credit Notes Without GST for Balances Adjustment Allowed, GST Applies for Interconnected Units Per Income Tax Act A participant sought advice on adjusting creditor and debtor balances without payment by issuing financial credit notes without GST implications. The creditors agreed to waive outstanding balances, and debtors are unable to pay, prompting the issuance of similar credit notes. A response indicated that such transactions are permissible under the Income Tax Act and GST Laws. However, if these book adjustments occur between interconnected units, GST at the applicable rate will apply. The discussion emphasizes the need for careful documentation and adherence to relevant legal provisions. (AI Summary)
TaxTMI 
TaxTMI 
TaxTMI 
