TDS on Credit Note

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This query is : Resolved

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This discussion clarifies the application of Tax Deducted at Source (TDS) when a credit note is issued against a tax invoice. It addresses concerns about the credit note amount, potential refunds from vendors, how vendors manage TDS, and how credit notes are reconciled against new invoices, particularly regarding the TDS component.

Kumar Abinash

Kumar Abinash (Querist)
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13 January 2020 Hello All,
I've a couple of doubts in understanding TDS application in Credit Note. Hope you can clarify it.

Consider I've a tax invoice

Invoice 1
Base Amount : 100
GST : 18
TDS : 10
-----------------------
Total Payable : 108

1. So if the seller has to issue a credit note the above
A. Will the credit note be of 108 or 118?
B. In case I do not want to transact with the seller/vendor anymore, will he issue me a credit note of 108 / 118? And much cash will I receive from the vendor?
C. How does the seller/vendor deal with TDS?
D. When I apply my credit note for the above invoice in a new invoice (Invoice 2), will I apply 108 against the invoice payable value(excluding the TDS) or will I apply 118?

Its very confusing for me on how the reconciliation will work for TDS.

Please help me out.

Thanks in advance.