Treatment of tour package

We are dealer of berger paint
Company provide us tour on yearly basis
But this year due to pandemic they provide us credit note against our account dues
Please explain the treatment of credit note?
Thank you
Replies (5)
Quick Summary
This discussion clarifies the accounting treatment for a credit note received from Berger Paint, typically issued against tour package benefits due to the pandemic. It explains that if the credit note includes GST, input tax credit may need to be reversed. However, if it's a financial credit note without GST, no GST adjustment is required, simply reducing the amount payable. The advice hinges on whether a prior agreement exists and if the credit note can be linked to specific invoices, determining if a GST credit note or a simple financial credit note should be issued.

Are you reg under GST
Section.34 of CGST Act not applicable in this case, hence GST credit note cannot be issued.

However, financial credit note can be issued without taxes.
In term of Section 15(3) :
The GST less Credit Note shall be issued only if when there is agreement entered into before the time of supply & can be linked to relevant Invoices.

So if there was agreement & can tag to relevant invoices, the GST less credit note shall be issued as per section 34 of CGST Act .
Else, simple financial credit note need to be issued.

If you are registered under GST

1. If GST credit note is received - Input Tax Credit to be reversed

2. If credit note received without GST - No adjustment required to be made in GST being just a financial credit note. The amount payable to them gets reduced to the extent of basic value.  

If you are not registered under GST

No adjustment required under GST. Amount payable to them gets reduced to the extent of invoice value (incl. GST if given with GST)

 

Thank you senior's for your valuable reply

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