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ITC REVERSAL OF CREDIT NOTE

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HARSHIL JAIN

240 Points Posted on 19 April 2021

Situation

I have returned some damaged goods to my supplier in march month for which they haven't raised a CREDIT NOTE and filed in GSTR1

For that particular transaction i have reversed the ITC taken in march month only as we have send those goods by raising a debit note and also adjusted accounts for that party in same month/year

Query

Now party will issue the credit note in april month gstr1 whose effect i have already taken in march month by reversing the itc and about to file in gstr3b

So would that again cause any liability on us as i have already reversed the itc in march month only or that wont matter as i have already reversed the ITC prior only..

Replies (2)

Quick Summary

You returned damaged goods in March and reversed the Input Tax Credit (ITC) for that transaction, as you expected a credit note from your supplier. However, the supplier will now issue the credit note in April. This raises a query about whether you'll face a new liability, given you've already accounted for the reversal. The advice suggests that if you've already issued a debit note, the supplier shouldn't issue a credit note to avoid a dual GST effect.

CA Puja Sharma

Chartered Accountant

3528 Points Posted on 19 April 2021

If you filed a GST Debit note in March 2021 then the party will not issue GST credit note in April 2021. Because if he will gst credit note then there will be dual effect in GST.

They will take the note of your debit note already summited and then file their GST return.