gst

Why am I not able to apply tax to the credit note as it states that tax liability cannot be reduced according to Section 34(2) of the CGST Act?

As per Section 34(2) of the CGST Act, taxable credit notes cannot be raised for an invoice which belongs to the previous financial year after November or the annual return filing date (whichever is earlier).

Scenario: Let’s say an invoice is raised in February 2023 and a credit note is raised in December 2023. Since the invoice belongs to the previous financial year, tax cannot be associated with the credit note. However, if the credit note is raised in August 2023, then tax can be associated as it is created before November.

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