GST UPDATE ON LESS PAYMENT ON INVOICE VALUE

GST UPDATE ON LESS PAYMENT ON INVOICE VALUE

On supply of goods or services or both, invoice is raised considering supplies provided however, the consumer makes less payment than invoice E.g. Invoice is raised of Rs. 10000/- + GST on consumer and later he gives payment of Rs. 8000/- + GST.

In such case, the impact of taxes on lesser amount paid will be as under:

Invoice has already been issued for Rs. 10,000/-; according to provisions of time of supply, tax should already have been paid at the time of issue of invoice. In other words, tax has been paid on the amount of Rs. 10,000/-, suppose it comes Rs. 1200/-. The ITC of Rs. 1200/- would already have been availed. Now, at the time of making the payment, the value is reduced to Rs. 8000/- and tax amount comes Rs. 960/- on this amount. In this case, the tax actually payable comes to Rs. 960/- while we have paid Rs. 1200/-; thus, the excess paid tax is Rs. 240/-.

In such cases, section 15(2) of the CGST Act, 2017 is attracted. This section reads as follows:-

"15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.

(2) The value of supply shall include–––

(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;

(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both;

(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and

(e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.

Explanation.––For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy."

(3) The value of the supply shall not include any discount which is given––

(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and

(b) after the supply has been effected, if—

(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and

(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply."

In this case, it is a type of cash discount only as the invoice was being raised of Rs. 10,000/- while the payment of Rs. 8,000/- was made. Since the discount has been offered after affecting the supply, the clause 3(b) will be applicable. In this case, the adjustment of excess paid tax, i.e. Rs. 240/- shall be allowed if the following two conditions are satisfied:-

(i)                If there is specific agreement in relation to such discount and that agreement should have been entered into at or before the time of such discount and it should be directly linked to that invoice.

(ii)              Since the invoice has the GST of Rs. 1200/- charged on it and the ITC has also been availed by the buyer; double benefit of adjustment of tax to supplier will not be allowed if the excess credit is reversed by the buyer.

In view of above, if these two conditions are satisfied, the excess paid tax shall be allowed to be adjusted in the return to be filed for the tax period in which adjustment is being made.

You can follow us at www.capradeepjain.com or at our face book page at http://www.facebook.com/GSTTODAYBYPRADEEPJAIN/

Your Need Our Concern…
Thanking you,
Regards,

Pradeep Jain, F.C.A.

Comments

GST UPDATE ON LESS PAYMENT ON INVOICE VALUE

Post a Comment

Query