TaxTMI 
TaxTMI 
Value and tax payment condition under provio to Section 16(2)of CGST AcT
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....alue and tax payment condition under provio to Section 16(2)of CGST AcT<br> Query (Issue) Started By: - Nikhil Virkar Dated:- 21-1-2025 Last Reply Date:- 22-1-2025 Goods and Services Tax - GST<br>Got 6 Replies<br>GST<br>Whether Adjustment thru debit and credit note i/r/o non-related party supply transaction tantamount to payment of value and tax as envisaged under proviao to section 16 (2) of CGST....
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.... Act to confirm the admissibility of ITC Reply By KASTURI SETHI: The Reply: Only debit note and credit note would not suffice. Such notes must be supported by basic docs required for availment of ITC as specified in Rule 36 of CGST Rules read with Section 34 of CGST Act. Reply By Nikhil Virkar: The Reply: Sir, my question is regarding adjustment of payments through debit and credit notes inste....
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....ad of making payment to each other of full bills, when the recipient is wanted to adjust / recover from a specific amount against bill of vendor. Say - Supplier raised bill for Rs. value 100 + GST 18= total Rs. 118 on recipient. Recipient want to recover bank charges Rs. 10/- from the supplier out of his bill amount. Scenario 1:- If recipient deduct Rs. 10/- if pay 108/- to the supplier, whether r....
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....ecipient will eligible to claim entire amount of ITC? Scenario 2 :- If recipient raised financial debit note for Rs. 10/- and make payment of Rs. 108/-, whether entire ITC is available to the recipient? Reply By KASTURI SETHI: The Reply: In my view, such adjustments are not allowed . (i) Read carefully 3rd proviso to Section 16 (2) below (d) which is extracted below "Provided also that....
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.... the recipient shall be entitled to avail of the credit of input tax on payment made by him [to the supplier] of the amount towards the value of supply of goods or services or both along with tax payable thereon". (ii) Also read Section 15 (2) (c) along with meaning and scope of incidental expenses. (iii) Bank charges are service charges and these fall in the meaning and scope of the term, ....
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...."incidental expenses" Reply By Shilpi Jain: The Reply: Once the supplier has paid the entire tax to the Govt. for a supply then credit should be eligible to the recipient. The book adjustment of payables and receiveables is also a valid mode of payment and should not affect the ITC availed. For financial credit note issued - ideally there should not be an issue on ITC to recipient t....
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....hough, knowing the reason for the same would be important before concluding. Reply By Nikhil Virkar: The Reply: Thank you sir and madam for your inputs. Reply By KASTURI SETHI: The Reply: If Rs.ten is deducted from the tax invoice without GST effect, then there should be no problem in such adjustments in the books of accounts.<br> Discussion Forum - Knowledge Sharing ....