Relief for Taxpayers-Delinking of Credit & Debit Notes from Original Invoice in GSTR-1, GSTR-6 & Refunds
As on September 17th, 2020 the GSTN Portal has enabled the facility to delink the credit & debit notes from their original invoices for the ease of compliance & reduction of workload on the taxpayer.
This update is a huge relief for the taxpayers who earlier had to issue a separate credit/debit notes for each invoice in the entire financial year.
This increased the burden of generation, storage & reporting of these extra documents.
However, a new update has lifted this weight off of the taxpayers’ shoulders, as per which a single credit/debit note would suffice for multiple invoices.
A Quick Walk with Debit & Credit Notes
GST or taxation in general is a necessity of any business, with that being said, businesses & accountants are well aware of Credit & Debit Notes by now.
Although, taking a quick stroll down the lane has never hurt anyone! So here is a brief explanation of Credit & Debit Notes for your reference-
Credit Notes-The supplier raises these invoice supporting documents for the recipients when-
- Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply
- Where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient.
- When there is decrease in Invoice value
Debit Notes- The supplier issues debit notes in the following cases-
- Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is less than the taxable value or tax payable in respect of such supply
- Note- Each invoice will have a separate credit/debit note made against it.
- Note- The credit & debit notes need to be furnished in the GST Returns-
- September following the end of the year in which such supply was made
- the date of filing of the relevant annual return
- The tax liability will be adjusted in the books & records but no changes in output tax liability of the supplier will be allowed if the incidence of tax and interest on such supply has been passed on to the next person in the thread such as the recipient.
- Credit & Debit Notes are a revision of the original invoice & do not possess a value of their own.
Changes introduced on the GSTN Portal- Delinking or Credit & Debit Notes from Invoice
This major amendment was made way before its recent implementation. In February 2019, Section 34 was amended & it was said that only one credit/debit note would suffice for multiple invoices, which is a huge relief for taxpayers.
However, the change has come into effect as of September 14th 2020 as per the GSTN.
Earlier, taxpayers had to create individual credit & debit notes for each invoices, & so there was a necessity to link each invoice with the credit/debit notes & mention the Invoice number in them.
With the amendment though, taxpayers need not do so, now one credit/debit note will suffice for multiple invoices & the linking is not mandatory while reporting the same in GSTR-1, GSTR-6 & while filing the refunds.
Following are the all details you need to know owing to this update-
1. Quoting of original invoice number on the credit/debit notes has been made optional for taxpayers
2. Single Credit/Debit Notes for multiple Invoices can be reported in GSTR-1, GSTR-6 & Refund filing
3. Supply Type can be chosen from the following- Regular, SEZ, DE, Export etc., to identify the table in which the credit note or debit note pertains
4. Place of Supply (POS) needs to be selected for each credit note or debit note, to determine the supply type i.e. Intra-State or Inter-State (State-wise POS Debit note or Credit notes to be reported)
5. Debit /Credit Notes can be declared with tax amount, but without any taxable value.
6. If credit note or debit note is issued for difference in tax rate only, then note value can be reported as ‘Zero’. in such cases,only tax amount will need to be entered.
7. While reporting the amendments to credit note or debit note similar changes has been introduced.
8. In the case of refund as well, the taxpayers can report such credit & debit notes without mentioning the original invoice number
9. The changes will be applicable on the following types of refund-
· Refund for export of services with payment of tax
· Refund on account of goods & services without payment of tax
· Refund on account of supply of goods or services to SEZ with payment of tax
· Refund on account of supply of goods or services to SEZ without payment of tax
· Refund on account of Inverted duty structure
Credit & Debit Notes in the e-Invoice
Credit & Debit Notes also fall under the criteria of e-Invoicing, meaning the taxpayers will also have to report credit notes & debit notes on the IRP & get IRNs for the same.
Additionally, while reporting the e-Invoice, the SCHEMA format also has the fields to declare the details of the preceding documents such as credit & debit notes for cross referencing & mapping the invoices with these documents.
The GSTN has again made these fields optional, so taxpayers can declare these details if they wish.
However, businesses will have to mandatorily report the Credit/Debit Notes on the IRP separately, so the same can auto-populate in their GSTR-1 & GSTR-6.
e-Invoicing is applicable to Credit & Debit Notes as well, which brings these documents way under the radar of the GSTN via reporting on the IRP.
This implies that e-Invoicing compliance is of high priority for all businesses that are liable to it irrespective of its impact as it is a mandatory rule under the CGST Act 2017.
The compliance can sometimes be a littlemore difficult than it seems considering the complex SCHEMA Format, Real-time Validations, Bulk operations, Archivingand more.
The Government also recommends the use of external solutions such as GSPs to comply better with e-Invoicing, one such GSP is GSTHero which is also the best e-Invoicing Solution in the market currently.
GSTHero e-Invoice Software makes e-Invoicing simple to understand and operate with its user-friendly features and prominent support.
So why GSTHero?
- Simple ERP integration
- High Data Security
- Storage- e-Invoice Archiving for 8 years!
- Direct integration of ERP with the IRP
- Scalable for high data volume
- Super Automated- requires minimal human input
- Reduced Errors with automation
- Saves time and delivers prompt results
- Enhanced productivity of your accounts team
- Compliance in real-time
- Bulk Operations- Generate, cancel, print, validate and edit e-Invoice in bulk within the ERP
- Achieve 100% Compliance with e-Invoicing