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

Kaveri Industries (Chennai) issued a tax invoice with taxable value Rs 4,00,000 and tax Rs 72,000. Later it found the correct taxable value was Rs 3,60,000. It wants to issue a credit note to its registered recipient. Which statement is correct under section 34 and Rule 53 read with it?

A credit note may be issued because the invoice showed a taxable value higher than the correct value. It must contain the prescribed particulars, including the corresponding invoice serial number and date, the recipient's GSTIN, and the value, rate and amount of tax credited. A debit note applies only to a shortfall.

  1. AA credit note is not permitted since only goods returned can be covered by a credit note
  2. BThe credit note may be issued, and it must carry the serial number and date of the corresponding tax invoice and the value, rate and tax amount creditedCorrect
  3. CA debit note must be issued because the value on the invoice was excessive
  4. DThe credit note need not contain the recipient's GSTIN even if the recipient is registered

Explanation

Section 34(1) allows a credit note where taxable value or tax charged exceeds that payable. The prescribed particulars include the GSTIN of a registered recipient, the corresponding invoice number and date, and value, rate and tax credited. A debit note is for a shortfall, so the debit note option is wrong.

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