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 tax rate must match the original supply rate; post-change rates cannot be applied on returns. Section 34 requires credit notes to reflect the tax charged in the original supply invoice; returns of goods effect a reversal of the original supply and GST law does not permit applying a subsequent rate in the credit note. The recipient's registration status affects treatment, and issuing a credit note at the original rate in a later period may create reporting implications in GSTR-1 and GSTR-3B.