Treatment of gst credit memo / credit note

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2018 Dear Experts,

please explain in brief , the treatment of credit note / credit memo treatment in GST 3b and GSTR-1.

Dipesh

Dipesh (Expert)
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19 November 2018 Credit note against supply have to adjust against outward liability in GSTR3B & show in column 9B of GSTR-1.

Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2018 Dear Dipesh sir, please explain little bit brief treatment in gst-3b, how i can adjust against outward liability.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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25 November 2018 If the Credit Note amount = taxable value (Rs. 100) + GST (Rs 18)
In GSTR 3B you will reduce Rs. 100 from the outward supplies and reduce Rs. 18 from the tax liability
In GSTR1 the credit note will be shown separately

Querist : Anonymous

Querist : Anonymous (Querist)

26 November 2018 Tq siddhartha sir, for your reply , is there any changes need in 3b for ITC or no effect in ITC regarding credit notes.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Here’s a clear and concise explanation on the **treatment of GST Credit Note / Credit Memo in GSTR-3B and GSTR-1**, including the impact on ITC:

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### 1. **Credit Note in GST**

* A **credit note** is issued by the supplier to reduce the value of a supply previously invoiced, due to returns, discounts, or errors.

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### 2. **Treatment in GSTR-1**

* Credit notes are **reported separately** in GSTR-1.
* They appear in **Table 9B** of GSTR-1 (Credit/Debit Notes issued during the month).
* You need to report:

* Taxable value reduced (e.g., Rs. 100)
* GST amount reduced (e.g., Rs. 18)

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### 3. **Treatment in GSTR-3B**

* In **GSTR-3B**, you adjust the **outward supplies** and the **tax liability** for the month by reducing the value of the credit note.
* Example:

* Original supply: Taxable value Rs. 100 + GST Rs. 18
* Credit note: Rs. 100 (taxable value) + Rs. 18 (GST)
* So, in GSTR-3B:

* **Reduce Rs. 100** from **outward taxable supplies** (in Table 3.1(a))
* **Reduce Rs. 18** from **output tax liability** (in Table 3.1(b) for CGST and SGST or 3.1(c) for IGST as applicable)

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### 4. **Effect on ITC**

* Credit notes do **not impact Input Tax Credit (ITC)** directly.
* ITC is claimed on **purchases** and **input services**.
* Credit notes affect only the **output liability** (supplier’s side).
* However, if you are the recipient and receive a credit note, you will adjust your ITC accordingly in your purchase records.

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### **Summary Table:**

| Aspect | Treatment |
| ------------- | -------------------------------------------- |
| GSTR-1 | Report credit note separately in Table 9B |
| GSTR-3B | Reduce outward taxable supplies & output tax |
| Effect on ITC | No direct effect on ITC for supplier |

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If you want, I can help you with example entries or formats for your GST returns. Would you like that?

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