No Reversal of ITC on financial credit note in relation to post sale discount

Last updated: 11 July 2023

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The Andhra Pradesh AAR ruled that businesses can claim full Input Tax Credit (ITC) on GST charged by suppliers, even when financial or commercial credit notes are issued later for post-sale discounts. The ruling clarified that ITC reversal is not required if the credit notes don't impact the original transaction value and aren't linked to specific invoices as per Section 15(3)(b) of the CGST Act. This decision provides clarity that buyers can retain full GST credit, provided there's no misuse of credit notes.

Court :
AAR, Andhra Pradesh

Brief :
The AAR, Andhra Pradesh, in the matter of Vedmutha Electricals India Pvt. Ltd. [Advance Ruling no. 05/AP/GST/2023 dated May 26,2023] ruled that assessee is eligible to take full credit of GST charged in invoice issued by the supplier even though later commercial/financial credit note has been issued.

Citation :
Advance Ruling no. 05/AP/GST/2023 dated May 26,2023

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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