Posting again - GST Credit Note or Financial Credit Note

We manufacture our chemical products in third party facilities as we do not have our own. 

  1. During the manufacturing process the waste generated in sold to appropriate buyers identified by us and a credit note is raised by the third party manufacturer (external manufacturer) for the billed amount excluding GST, that is a Finaicial Credit note.
  2. Where the manufacturer spends money out of his pocket for some sundry transportation or consumables he raises a Debit Note on us which excludes the GST. That is a Finaicial Debit note.

The manufacturer is now insisting that they have been asked by their auditor to raise a GST credit or debit note only instead of a Financial Crefit or Debit Note. We feel that a Finanancial Credit or Debit note is sufficient.

We seek clarifications from experts in this forum on whether Financial Credit / Debit Note is acceptable.

Replies (2)
Quick Summary
This discussion clarifies the difference between Financial Credit/Debit Notes and GST Credit/Debit Notes. While Financial notes are for commercial adjustments like price changes or discounts, GST notes are specifically for rectifying GST charges or claiming benefits. The consensus is that a GST Credit/Debit Note is required for tax compliance, even if a Financial note is also issued for commercial reasons.

In GST, a Financial Credit/Debit Note and a GST Credit/Debit Note serve different purposes. A Financial Credit/Debit Note is used to adjust: - Prices - Discounts - Incentives - Rebates It's a commercial document, not a GST document. A GST Credit/Debit Note, on the other hand, is a GST-specific document used to: - Reverse or adjust GST charges - Claim or pass on GST benefits - Rectify GST errors The manufacturer's auditor is correct in insisting on a GST Credit/Debit Note, as it's a GST requirement. While a Financial Credit/Debit Note is acceptable for commercial purposes, it's not a substitute for a GST Credit/Debit Note. To comply with GST regulations, you should issue a GST Credit/Debit Note in addition to the Financial Credit/Debit Note.

Thank you very much sir. This is very useful.

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