CBIC Circular No. 212/6/2024-GST: Mechanism for Compliance with Section 15(3)(b)(ii) of CGST Act

The CBIC has released Circular No. 212/6/2024-GST dated June 26, 2024, outlining the mechanism for suppliers to provide evidence of compliance with the conditions of Section 15(3)(b)(ii) of the CGST Act, 2017.

This circular addresses concerns raised by trade and industry regarding the verification of input tax credit (ITC) reversal by recipients for discounts offered via tax credit notes after the supply has been made. Currently, there is no functionality on the common portal enabling suppliers or tax officers to verify this compliance.

In response, the CBIC clarifies that suppliers may obtain a certificate from recipients, issued by a Chartered Accountant (CA) or Cost Accountant (CMA), confirming the requisite ITC reversal. This certificate must include details such as credit note specifics, relevant invoice numbers, and the amount of ITC reversal per credit note. Certificates issued must have a Unique Document Identification Number (UDIN), verifiable through respective professional bodies’ websites.

For discounts not exceeding Rs 5,00,000 in a financial year, suppliers may alternatively procure an undertaking or certificate from recipients affirming the ITC reversal, along with detailed documentation as specified.

These certificates or undertakings will serve as acceptable evidence under Section 15(3)(b)(ii) of the CGST Act, 2017. Suppliers must present these documents during audits, scrutiny, or other proceedings upon request by tax authorities.

Trade notices are recommended to disseminate the circular’s details effectively.