Aggregate value of credit notes which have been taken in audited annual financial statement but not considered as credit note in CGST act (Section 34 of CGST Act) will be considered in this field
In other words,
Details regarding the credit note which have been considered in audited annual financial statement but have not been considered while filing of GST return will be covered under this point.
All the adjustments made to the turnover where there is an effect of reduction due to a credit note issued have to be figure out for the purpose of reconciliation between the books of accounts and the GST returns to be filed.
There could be an adjustment made to the receivable and payable in the books of accounts .
Care should be taken to calculate the information of credit note that is reduced from the turnover.
Accounting standard 'Revenue recognition' can be used for filling information in this area.
Analysis
All the information in the Credit Note register without having a GST effect should be collated and provided. Please note that due to '+' sign, credit notes not conforming to section 34 will result in said amount of turnover being liable to output tax by addition to the turnover reported in books compared to that reported in GSTR 9 which is the tax paid turnover.
Examples
1. M/s ABC and Co. supplies goods on credit to the customer Mr. A for Rs.100,000 [applicable GST 18%]. Mr. A pays the supply value much before the credit period and in turn requests the supplier to extend a cash discount of 2%. Cash discount extended at 2% shall be a Non-GST Credit note which should be considered for disclosure in Part II at Table 5J.
2. Mr. A has supplied goods for Rs.20,000/- [applicable GST 12%] along with transport charges for Rs.2,000/- to M/s ABC and Co., On receipt of the goods, the customer complains that the goods are damaged. Mr. A extends a discount of Rs.2,500/- to the customer and issues a Credit Note without giving effect to the GST for the damage. This adjustment to the amount receivable from the customer shall be accommodated by way of a Credit Note and the same shall call for adjustment to the turnovers.
Notes to Consider
• Segregation of adjustments to turnover on account of Credit Note with GST and without GST has to be done carefully and dealt with appropriately as discussed in the above illustrations
• Credit Note issued and subsequently cancelled should be considered while considering the summary of adjustments
• Any adjustment on account of reduction in receivable not being adjusted to the turnover should not be considered for reconciliation
• Accounting / Financial Credit Note issued if any in relation to reduction in the inward supply price consideration should not be considered for filling up the information in the above Table.
Auditors Disclosure
Auditor has to disclose the practice adopted for collating relevant information from the books of accounts and the basis for determining the adjustments eligible for reconciliation purposes. Reference to the Accounting Standard issued by the ICAI has to be made and indicated whether the Registered person has adopted or not.
The author can also be reached at ruchika.tulsyan@gmail.com
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