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CA Intermediate · Taxation · Tax Invoice; Credit and Debit Notes

Mehta Steels, Surat, issued an invoice in March for taxable value Rs 5,00,000 plus 18% GST. In October of the next financial year, it discovered the value was understated and the correct value is Rs 5,50,000. Which statement is correct about the document to be issued, and the latest date for declaring it in the return?

Mehta Steels should issue a debit note for Rs 50,000 plus GST of Rs 9,000. The debit note's tax is reported in the return for the month in which the debit note is issued, not the month of the original March invoice.

  1. AIssue a debit note for Rs 50,000 plus GST of Rs 9,000; the tax is declared in the return for the month of issue of the debit noteCorrect
  2. BIssue a supplementary invoice; the tax is declared in the return for March
  3. CIssue a revised invoice; the tax is declared in the return for the month of discovery or later March return
  4. DIssue a debit note; the tax is declared in the return for March since the original supply was in March

Explanation

An upward revision of taxable value requires a debit note: 18% of Rs 50,000 = Rs 9,000. The debit note is declared in the return for the month in which it is issued, not the month of the original invoice. So the March-return option is wrong.

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