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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Procedural Compliance under GST

Under Section 34 of the CGST Act, 2017, a registered supplier may issue a credit note to the recipient in which of the following situations?

A credit note may be issued when goods supplied under a tax invoice are returned by the recipient. Section 34(1) also covers excess taxable value or tax and deficient supplies. An under-stated invoice value needs a debit note, not a credit note.

  1. AThe taxable value in the tax invoice is found to be less than the taxable value of the supply
  2. BThe goods supplied under a tax invoice are returned by the recipientCorrect
  3. CThe supplier wishes to recover additional freight not mentioned in the invoice
  4. DThe recipient has delayed payment beyond the agreed credit period

Explanation

Section 34(1) allows a credit note where the taxable value or tax charged exceeds what is payable, where goods are returned, or where goods or services are found deficient. Goods returned by the recipient is one of these grounds. A lower invoice value calls for a debit note instead, and freight omission or late payment are not credit note grounds.

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