TaxTMI 
TaxTMI 
TaxTMI 
Issue of Credit Note on invoices raised for interest portion and gst discharged to the Government
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....ssue of Credit Note on invoices raised for interest portion and gst discharged to the Government<br> Query (Issue) Started By: - DHARIWAL AND SREENIVAS Dated:- 14-1-2026 Last Reply Date:- 17-1-2026 Goods and Services Tax - GST<br>Got 4 Replies<br>GST<br>One of our clients has raised an invoice for interest payable for the delayed payment in respect of the original supply. As they have raised....
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.... an invoice charging GST on the interest value. Presently, the interest amount is not received from customers, and customers are not willing to pay the interest. Whether the client can raise a credit note for cancelling invoices raised for the interest portion. Whether a credit note can be raised for this type of transaction. Is there any legal way to reduce the gst amount ....
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....discharged to the Government for the reason that amounts were not received (in respect of interest portion) from customers? Reply By Raam Srinivasan Swaminathan Kalpathi: The Reply: Credit notes covered under Section 34 can be issued for the previous year only up to Nov 30 (i.e.) October 3B Returns. Credit notes can be issued only towards "taxable value or tax charged i....
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....n that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient" Technically you should be able to issue a credit note provided the rationale encompasses the parameters set forth by Sec.34 further cirucumsribed by the clients customer a....
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....ccepting the CNs (and not rejecting the CNs) at their respective IMS portals. Having availed full ITC (if they have!) which RTP will want to reverse? The way forward will be to have a conversation with the customers, come to a concurrence that the credit notes to be issued by your client will be accepted by their customers at their respective accounts at the IMS portals and then proceed to ....
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....issue the same (provided the timelines are adherred). Reply By DHARIWAL AND SREENIVAS: The Reply: Dear Sir, thanks for your valuable clarification/advice. Reply By Shilpi Jain: The Reply: The liability to pay GST on interest triggers only when the interest amount is received. This is coming out from the time of supply provisions under GST - section 12 & 13. So you can issue ....
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....a credit note only for the GST portion on the interest and the interest amount that has been considered as a taxable value. Interest can be regarded as "other amounts" in the invoice. Or you could then consider issuing a commercial invoice mentioning the interest and GST thereon. Reply By DHARIWAL AND SREENIVAS: The Reply: Dear madam, thanks for your valuable views<br> Discussion Forum - Knowle....
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....dge Sharing ....