GST rate on credit notes post rate change

[BIJO SCARIA]

I sold goods before the GST rate change (say, on 20th September 2025, when the applicable tax rate was 28%). The customer returned the goods after the rate change (say, in October 2025, when the tax rate became 18%). While issuing a credit note in October 2025, should I apply the old tax rate of 28% or the new rate of 18%?

[Sadanand Bulbule]

Section 34 of the CGST Act mandates to issue credit note for the original supply invoice. On return of goods by the customer, you have to issue him a credit note for tax at 28% charged in the original supply invoice. Because the return of goods is effectively a reversal of the original supply.

GST law does not allow changing the rate retrospectively in credit notes.

[Shilpi Jain]

What is your desired result? Customer is registered or unregistered.

If registered you can also consider whether you would want customer to return or show it as a sale to you.

[BIJO SCARIA]

unregistered

[K.lakshmipati rao]

Dear experts,

On return of goods by the B2B customer, if a credit note for tax at 28% charged in the original supply invoice is issued in the month of October 2025, what could be the impact in GSTR-1 & GSTR-3B monthly Return, since there would No B2B turnover at 28% in the month of October 2025.

Please suggest.

 

AI Summary

Credit note must reverse original tax and rate when goods sold before rate change are returned after rate change When goods sold before a rate change are returned afterward, the credit note must mirror the original supply's tax treatment; the tax charged on the original invoice should be reversed, not adjusted to the new rate. The return is treated as a reversal of the original supply, so the supplier should issue a credit note reflecting the earlier (higher) rate. Practically, this will require reporting adjustments in the periodic GST returns to reverse the original taxable value and tax liability, which can create timing and reporting mismatches between invoice month and credit note month.