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GST outward tax liability increase

47 views 1 replies

sunil shrivas

2 Points Joined April 2017

Dear all,

We previously issued an e-invoice to our client and paid the associated tax. However, the client rejected the invoice. We became aware of this when we attempted to issue a credit note against it, which the client also rejected.

As our tax liability will increase next month, we need to understand how to adjust this amount for a set-off. Could you please advise on the correct procedure for adjusting these funds?

Thanks

Replies (1)

Aashok Kumar Sharma

Finance/Compliance Consultant

60471 Points Joined June 2010

To adjust the tax paid on a rejected e-invoice, you must report a GST Credit Note in Table 9B of your GSTR-1, regardless of the client's internal system rejections. This will automatically reduce your outward tax liability in the corresponding month's GSTR-3B. If the reduction exceeds your current month's liability, the negative balance can be carried forward to set off future taxes. Keep written proof of the client's rejection to prove they did not claim the ITC.