Delinking Of Credit Note And Debit Note On GST Portal

On 17 September 2020, the GST portal enabled the delinking of Credit Notes/Debit Notes (CDNs) from their original invoices. That means taxpayers can now report consolidated CDN in GSTR-1/GSTR-6 or while filing refund applications without declaring the original invoice number and its date.

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Features Of The New Facility

On the GST portal, taxpayers can now:

• Report a single credit note or debit note for multiple invoices in table 9 of form GSTR-1 or GSTR-6. That means, If a taxpayer has issued 10 invoices in September and October 2020 to a vendor and wants to issue a credit note in December 2020, due to price fluctuations, he/she can issue a consolidated, single credit note for all the 10 invoices issued earlier.
• Select the supply type:
  • Regular,
  • SEZ,
  • DE, Export, etc., to automatically identify the table to which such credit note or debit note relates.
• Indicate the Place of Supply (POS) against each credit note or debit note, to identify the supply type, i.e. Intrastate or Interstate.
• Declare only the tax amount (without taxable value) in the credit note or debit note. That means, if a credit note or debit note is issued for the differences in the tax rate, then the note value can be reported as ‘Zero’. Only the tax amount can be entered in such cases.
• Make amendments to the credit note and debit notes based on the points mentioned above.
• Apply for refunds by reporting such credit notes or debit notes in statements (filed with the refund application) without mentioning the corresponding invoice number. The taxpayers would be required to select the document type from a drop-down comprising of:
  • Invoice
  • Debit note
  • Credit note.
• A refund application can be filed for:
  • Refund for export of services with payment of tax
  • Refund on account of goods & services without payment of tax
  • Refund on account of supply of goods or services to SEZ with payment of tax
  • Refund on account of supply of goods or services to SEZ without payment of tax
  • Refund on account of inverted duty structure

How To Report Credit/Debit Note In GSTR-1?

Benefits

• In the past, taxpayers had to issue separate credit or debit notes for every relevant tax invoice raised in a financial year under GST. However, now, one credit/debit note shall suffice.
• This facility will reduce the disclosure burden on the taxpayer and thus, simplify the GST compliance. It will also mitigate the practical difficulties of issuing a debit note and credit note in GST against multiple invoices as tagging of single CDN to multiple invoices was not possible.

Points To Remember 

• Section 16(4) of the CGST act was amended to enable delinking of tax credit available on the debit notes from the issue date of its original invoice. That means tax credit on notes can be claimed in the financial year the note is issued. Before this amendment, the deadline for taxpayers to claim the Input Tax Credit (ITC) on invoices and debit notes of a financial year was the earlier of:
  • Due date to file returns for September of the following year or
  • Actual date of filing the annual returns for that financial year

Example: DEF ltd. received a debit note on 15 July 2020 for an invoice dated 12 March 2020. As per the amendment, since the debit note will be delinked from the original invoice date, the ITC on such note can be claimed in FY 2020-21. That means, DEF ltd. has time till the due date of filing GSTR-3B of September 2021 to claim the ITC on this debit note.

• Entering details of preceding documents of a debit or credit note in the e-Invoice schema is optional.

Note: It is advised to store the original invoice details for future reference. This will benefit the taxpayers for verification (if any) during audits.