New GST return filing system was born out of a need to make the process of regular tax return filing as smooth and simple as possible. In this article, we will compare the reporting of credit note/debit note by looking at the following aspects:
Update as on 14th March 2020*
The new GST return system will be implemented from October 2020.
The present return filing system (GSTR-1, 2A & 3B) will continue until September 2020.
*Subject to CBIC notification
Issue of credit note/debit note is important to keep the system of invoicing transparent for both parties. Under GST, it holds relevance in reporting in the returns as well.
1. Reporting of credit note/debit note under the old return filing system
The reporting of credit/debit notes on the GST portal was made in GSTR-1. It can be classified as follows:
- Credit note/debit note issued to unregistered persons (B2C supplies): It must be declared in Table ‘9B – Credit/Debit Notes (Unregistered)’. The details required are as follows:
- Debit/credit note number
- Original invoice number
- Original invoice date
- Type (whether debit note, credit note or refund voucher),
- Value and also whether the supply is eligible to be taxed at a differential percentage of the existing rate of tax, as notified by the government.
- Credit note/debit note issued to registered persons (B2B supplies): This must be reported in Table ‘9B – Credit/debit notes (Registered)’. The details required are as follows:
- GSTIN of receiver
- Debit/credit Note No.
- Original invoice number (in respect of which credit/debit note is being issued)
- Original invoice date
- Type (whether debit note, credit note or refund voucher)
- Supply type (whether inter-state or intra-state) and also if the supply is eligible to be taxed at a differential percentage of the existing rate of tax, as notified by the government.
2. Reporting of credit note/debit note under the new return filing system
The reporting of credit or debit notes under the new return filing system will be made in Form GST ANX-1. The reporting involves:
The taxpayer must report these in Table ‘3A: Supplies made to consumers and unregistered persons (net of debit/credit notes)’. It is evidently mentioned in the table that supplies are to be declared net of debit/credit notes.
Since it relates to B2C supplies, the declaration is not required to be made at the invoice level. The particulars to be furnished in this table are the place of supply, tax rate, taxable value and tax amount under each head -IGST/CGST/SGST/UTGST/Cess.
- Credit note/debit note issued to unregistered persons (B2C supplies):
These details must be furnished in Table ‘3B: Supplies made to registered persons (other than those attracting reverse charge) (including edit/amendment)’. The supplies are not to be declared on a net basis since the declaration is made at the invoice level.
The particulars to be furnished in this table are GSTIN/UIN, place of supply, document details like type, CDN number, date and value, HSN Code, tax rate, taxable value, tax amount under each head -IGST/CGST/SGST/ UTGST/Cess.
In order to furnish a credit/debit note, the same has to be selected from the ‘Document Type’ drop-down list. In the old return filing system, there was a separate table for declaration of credit/debit notes to registered persons but now such details can be declared within the same table used to declare outward supplies.
- Credit note/debit note issued to registered persons (B2B supplies):
3. Implication of changes in the return filing system
The most significant change when it comes to reporting of credit notes in the new return filing system is that there is no longer a separate table for this purpose since it is integrated within the table that is used to declare outward supplies:
The details of outward supply provided in Table 3A need to be net of credit/debit notes. There is no invoice level declaration in this table, hence individual credit notes need not be declared separately. The annexure allows negative figures in case the value of credit notes exceeds the value of outward supply made, in the given tax period. The old system of filing required the credit/debit notes to be linked against the original invoices that needed to be rectified. However, the new system does not require such linking of original invoices to be made within the return.
- Supplies to unregistered persons (B2C supplies):
The details of outward supply provided in Table 3B are at the invoice level and hence each credit/debit note would also have to be provided individually, with all the requisite details. Even here, there is no requirement of linking the credit/debit notes to the original invoices.
- Supplies to registered persons (B2B supplies):
4. Illustration for reporting credit notes and debit notes
Mr A supplied certain goods to Mr B (intra-state supply) on 1 May 2019 with a taxable value of Rs.10,000 and GST charged at 18% (9% CGST and 9% SGST) thereon.
An extract of the invoice is produced below:
However, on 1 August 2019, Mr B finds out that goods worth Rs.2,000 (excluding GST) were defective and requests Mr A to issue a credit note in respect to the defective goods. Mr A immediately verifies the same and issues a credit note for Rs.2,000 (CGST @ 9% = Rs.180 and SGST @9% = Rs.180). Assuming that both Mr A and Mr B are registered, Mr A will make the following declaration in ‘Table 3B’ of Form GST ANX-1 for the month of September:
3B: Supplies made to registered persons (other than those attracting reverse charge) (including edit/amendment)
|(+) CGST @ 9%
|(+) SGST @ 9%
||Place of Supply
||Tax rate (%)
||State/ UT Tax