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

Gupta Foods, a registered supplier, issued a tax invoice in the financial year 2023-24 and now issues a credit note for that supply. Applying section 34(2), by when must it declare the credit note in its return to reduce output tax liability, and what additional condition applies?

The credit note must be declared in the return for the month of issue, but not later than 30 November following the end of the financial year of the supply or the annual return date, whichever is earlier. No reduction is allowed if tax and interest incidence was passed on.

  1. AReturn for the month of issue, but not later than 30 September following the financial year end; no reduction if tax incidence passed on
  2. BReturn for the month of issue, but not later than 30 November following the end of the financial year of supply, or the date of furnishing the annual return, whichever is earlier; no reduction if incidence of tax and interest has been passed on to another personCorrect
  3. CAny time within three years of the invoice; no further condition
  4. DReturn for the month of issue, but not later than 30 November following the end of the financial year of issue, with no condition on incidence of tax

Explanation

Section 34(2) fixes the outer limit as 30 November following the end of the financial year in which the supply was made, or the date of furnishing the relevant annual return if earlier. The proviso bars a reduction of output tax where the incidence of tax and interest has been passed to another person. Option A uses the old September date, and D uses the wrong year reference.

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