SMART ADMIN HELPS IN COMPILING GSTR 3B AND GSTR-1 BY
CLICK OF A BUTTON WITH DATA FROM INVOICE, CR NOTE AND DR NOTE
Everyday business involves numerous transactions in
relation to selling goods and providing services. It is mandatory for a GST-registered supplier
to issue a tax invoice. There are
situations where the supplier commits error while filing the tax invoice. In order to rectify these kinds of situations
debit and credit notes are defined under GST.
Debit and Credit notes play a crucial role in context of GST since it
helps to rectify errors and adjust the value of supplies made. It is good to use appropriate software to
general all such reports by click of a button to avoid errors in GST filing.
What is a Credit Note?
A credit note is a document that is issued by supplier to
a buyer in case of reduction in the value of goods or services supplied. After the supplier’s issue of the tax
invoice, if there is any reduction in the taxable value then a credit note is
issued mentioning the prescribed particulars.
Various reasons when a credit note is issued such as return of goods,
excess payment, quality issues, damaged goods, and post-sale discount.
When a credit note is issued following entries should
be made:
·
The value of credit notes needs to be reduced
from the total value of the original invoice.
·
The amount of tax paid on the original invoice
needs to be reduced from total tax paid.
·
The value of a credit note needs to be recorded
in books of accounts as a negative amount.
Assuming that Supplier A sells goods to Buyer B along
with a tax invoice. Buyer B observed
some quality issues and then returned goods along debit note. Supplier A accepted the debit note and issued
a credit note as an acknowledgement to buyer B.
This example illustrates when a credit note is issued. With a Credit
Note, the tax liability of the seller decreases correspondingly.
What is a Debit Note?
A debit note is a document that is issued by a supplier
to a buyer, which indicates an increase in the amount of money owed by the
seller. Debit notes are issued in
situations such declaration of lower tax value, quantity received by recipient
is more or any errors committed.
When a debit note is issued following entries need to
be made:
·
The amount of debit note should be added to the
total value of original invoice.
·
The amount of tax paid on the original invoice
should be added to the total tax paid.
·
The value of debit note should be recorded in
the books of account as a positive amount.
XYZ Ltd. Sells 1,000 T-shirts at the rate of Rs.150 per
item to ABC Enterprises. XYZ makes the delivery and issued an invoice for the
order to ABC Enterprises. However, XYZ
Ltd. realizes that the rate per item was Rs.140 on the invoice instead of
Rs.150 per item. It resulted in an
understating of the invoice by Rs.10,000.
XYZ Ltd then issues a debit note to ABC Enterprises, thus rectifying the
error mentioned. This example
illustrates when a debit note needs to be issued.
Time Limit to
Issue Credit/Debit Note
GST law defines a certain limit for the issue of a debit
note or a credit note to get the benefit while filing tax return. The issue of debit notes and credit notes
should be declared in the GST returns filed for the month in which such a
document is issued. GST law mentions the
maximum time limit for declaring the same in GST returns if it pertains to a
particular financial year as follows.
·
30th September of the following year in which
such supply was made.
·
The actual date of filing the annual return of
the concerned period.
The credit note and debit note records must be kept on
file for seventy-two months following the deadline for submitting the annual
return for the year relevant to such accounts and records.
Overall, debit and credit notes play an important role in
accounting and are essential for business to maintain accurate and transparent
financial records.
Once you start using Smart Admin for invoice purposes,
the system accumulates all data points related to GSTR Reports – GSTR 3B and
GSTR-1, and generates reports as needed.
By Click of a button you get all reports with details of each invoice
issued and thus reduce the need for multiple review of data points while filing
GSTR.
Readers are advised to refer to GST literature for
updated and accurate information pertaining to GST, and the info given above is
only indicative in nature.
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