Credit Note to be issued in Old tax rate or new tax rate

[Venkatesh Dhongadi]

X Supplied 12% GST rate goods to Y before 22nd Sept 2025 at 100 plus GST  which totals to Rs. 112. Now the same goods being returned by Y. Whether Credit note to be issued @ 12% or 5% as there is change in rate of tax w.e.f. 22nd Sept. 2025.

[Ryan Vaz]

Applicable Law / Notifications

• Section 34, CGST Act, 2017 – Credit notes for returned goods / excess tax charged

• Section 9, CGST Act, 2017 – Levy and collection of GST

• Section 14, CGST Act, 2017 – Change in rate of tax (time of supply rules)

• CBIC Education Guide & FAQs (GST) – Credit note mirrors original supply

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Short Practical Answer

?? Credit note must be issued at the original GST rate of 12%, not 5%.

[Shilpi Jain]

Credit note is for reducing the value of the original supply and the tax thereon. To be at old rate of 12%.

If the customer returns it  on a tax invoice it would be at 5% as a new supply!

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

I agree with the views of Shilpi Jain, Madam. The credit note must be issued for the original rate of tax charged in the invoice, change in the rate of tax applicable for new transactions. In the above case credit note is to be issued at a rate of tax 12%. 

[KASTURI SETHI]

Credit note has to be issued @12%. i.e. at the rate of tax what was charged in the original invoice. RETURN of  tax-paid goods cannot be   treated as  AFRESH supply. at all.

[Venkatesh Dhongadi]

Thank you sirs for your replies

AI Summary

Credit note must mirror the original invoice tax rate; returns of original supplies use the original GST rate, not the new rate. A credit note reduces the value and tax of the original supply and therefore must mirror the tax rate applied in the original invoice; if the supplier charged 12% GST originally, the credit note should be issued at 12% despite a subsequent change to 5%, whereas a later bona fide fresh supply by the returner would attract the rate prevailing at that later time.