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CA Final · Indirect Tax Laws · Tax Invoice, Credit and Debit Notes

Ananya Textiles (registered) sold goods to Bhavya Garments in FY 2025-26 and issued an invoice in August 2025. In January 2026 it issued a credit note for part of the goods returned. Which statement about the time limit for declaring this credit note to reduce output tax liability is correct?

The credit note must be declared in the return for the month in which it was issued, and not later than 30 November following the financial year of the supply or the date of furnishing the annual return, whichever is earlier.

  1. AIt must be declared in the return for the month of issue, but not later than 30 November following the end of FY 2025-26 or the date of furnishing the relevant annual return, whichever is earlierCorrect
  2. BIt must be declared only in the return for August 2025, the month of original supply
  3. CIt may be declared at any time without any limit if the buyer agrees
  4. DIt must be declared by 30 September following the end of the financial year, as the Act presently provides

Explanation

Section 34(2) requires declaration in the return for the month of issue, but not later than the thirtieth day of November following the end of the financial year of the supply, or the date of the annual return if earlier. The September date was substituted by November, so option D is outdated.

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