Goods and Services Tax – Started By: – Sandeep Yadav – Dated:- 3-1-2019 Last Replied Date:- 5-1-2019 – XYZ. Ltd(supplier) has given price difference to ABC Ltd.(recipient) by issuing a non gst document, because as per Sec15 discount which has not been agreed at the time of supply cannot be reduced from the value of supply.( This is also clarified from advance ruling sought by UltraTech Cement.). Now ABC Ltd. has not reversed the ITC proportionate to price diff received from XYZ.Ltd. ABC Ltd. has shown the price diff as its income in P&L A/C. My questions are: 1. Is there any need to reverse ITC proportionate to price diff received? 2. Whether there is any GST liability on price diff shown as income in P&L? (If ITC has not been reversed) – Reply By Madhavan iyengar – The Reply = My views XYZ has not reduced its taxable value ( post discount issued) and has only given a financial credit note to ABC Ltd, and there is no disclosure in GSTR-1 GST Impact for ABC Ltd – ABC is not req
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tion arises that what would the tax compliant and beneficial treatment: Option 1: Reverse ITC on price Diff and show it as deduction from purchases in trading account. Option 2: Do not reverse ITC on price diff and show it as seperate item in credit side of P&L A/c and pay tax on it considering it as supply of services. One more question is that if recipient set off the payment of supplier with price diff received then whether it violates the provision of sec16(2) regarding payment of consideration within 180 days. I also want to mention that there is big ambiguity and lacuna in GST law in this regard.(Earlier in VAT regime there was a provision that no one can sell goods below its cost, but there is no such provision in GST Law.) – Reply By Abhishek Sethi – The Reply = Can you clarify more around 'Price difference'? Is it a discount adjustment (some market factors or any business reason) or was original Invoice was raised incorrectly?If it is former, then it should be book
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upply, since ITC reversal is ruled out as the supplier has not adjusted its output gst thus the 2A will also reflect the credit so need to reverse ITC,being a financial transaction on discount amount ABC needs to discharge the GST as this will also offset the excess ITC taken by ABC against the out put gst – Reply By Madhavan iyengar – The Reply = sending again as there was an error in earlier mailIn my view GST is a tax on value addition the entire chain claims itc and discharges gst.In this case as it is mentioned the credit note is not issued fro discount it is only a financial entryeffectively what has happened is ABC has got the benefit of lower price thru discount but has taken Full ITC on the relevant supply, since ITC reversal is ruled out as the supplier has not adjusted its output gst thus the 2A will also reflect the credit so no need to reverse ITC, by ABCbeing a financial transaction on discount amount ABC needs to discharge the GST as this will also offset the excess ITC
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