Matching, reversal and reclaim of reduction in output tax liability Analysis :
A. Issuance of Credit note for reduction in output tax liability:
Where the output tax is reduced by the supplier by way of issuing a credit note, details of every such credit note issued is to be matched with the corresponding reduction in the credit by the recipient by availing lower input tax credit to that extent in the return furnished for such period in which details of credit note is made available to the recipient on the portal. For example: a supply invoice was originally issued at ` 150,000 was overstated by ` 50,000, to that effect a credit note is issued by the supplier (along with tax). This credit note is to be accepted by the recipient and should result in reduction of input tax credit to the said extent in the return furnished by the recipient of the supply.
B. Reduction in output tax liability due to duplication of output liability:
Similarly, where the supplier has paid taxes twice on a particular supply by issuing tax two tax invoices or otherwise and a credit note is issued to rectify the said error, the recipient of supply shall reduce his input tax credit (only if availed credit twice) in the tax period in which such credit note is issued by the supplier and the same is made available to the portal to the recipient. same shall also be accounted by the recipient.
Additional Comments:
All procedures as prescribed in analysis of section 42 supra and related rules thereto, would equally be applicable to this section and the reference to the same can be made to understand consequences, liability to pay interest and refund of interest paid earlier by way of credit to electronic credit ledger.