Clarification on Compliance Evidence Mechanism for Section 15(3)(b)(ii) of the CGST Act, 2017

Last updated: 27 June 2024

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This notification clarifies the mechanism for providing evidence of compliance with Section 15(3)(b)(ii) of the CGST Act, 2017, specifically concerning discounts offered by suppliers via tax credit notes after a supply has been made. Previously, there was no way for suppliers or tax officers to verify if the recipient had reversed the input tax credit attributable to these discounts. A new mechanism is being introduced to allow for this verification.

F.No. CBIC-20001/4/2024-GST Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs GST Policy Wing ***** North Block, New Delhi Dated the 26th June, 2024 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissio

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FAQ :

The notification clarifies the mechanism for verifying compliance with Section 15(3)(b)(ii) of the CGST Act, 2017, regarding the reversal of input tax credit by recipients when suppliers issue credit notes for discounts after a supply.

It addresses the condition that for discounts offered via credit notes after supply, the taxable value is not reduced unless the recipient reverses the input tax credit attributable to that discount.

There was no facility on the common portal for suppliers or tax officers to verify whether recipients had reversed the input tax credit attributable to discounts provided through credit notes.

A suitable mechanism is being introduced to enable suppliers and tax officers to verify the fulfilment of the condition regarding the proportionate reversal of input tax credit by recipients.

It is addressed to the Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Central Tax and Principal Directors General/Directors General.