The Virulent effect of a Credit Note- GST credit note or a Commercial Credit Note

A Financial Credit Note is a potent document to brow beat the GST system to dilute the consideration payable by the recipient to the supplier. At the same time, the Input tax Credit, is available in the hands of the buyer, even in situation where the entire consideration is written off by a Financial credit note. This can comprehensively be a tool in fake ITC mechanism. It is also surprising that financial credit notes can be issued at any time even after the time limit for issuance of CN that can be adjusted in the GST ecosystem. It is equally incredulous that companies can opt for financial credit notes even before the time limit runs out for the issuance of credit note where adjustments can be made in the GST ecosystem on the value and the taxability of the same. It is rather surprising that the GoI has let go of this concept in Budget 2025. This note attempts to give a small take on issuance of Credit note, both in the GST ecosystem and financial CNS which remain largely outside the GST ecosystem.