CA Certificate required while issue Credit Note Deduction

Credit Note Deduction under GST – New Compliance Alert!

As per CBIC Circular No. 212/6/2024 dated 26-06-2024, issuance of a Credit Note alone is no longer sufficient for claiming tax deduction under GST.

The supplier must obtain a CA/CMA certificate to claim a deduction on tax via credit notes, confirming that The recipient has reversed proportionate ITC claimed earlier. New Goods and services tax Law  requirement for credit note deductions: merely issuing a credit note is NO LONGER sufficient for claiming deductions on post-sale discounts. This requirement is added due to prevent misuse where the supplier adjusts tax liability through a credit note, but the recipient retains the full ITC — leading to revenue loss to the government. (CBIC Circular No. 212/6/2024 | Dated: 26-06-2024).

What’s the change in credit note deduction under GST ?

Ans: To claim deduction on tax via credit notes, suppliers must now ensure ITC reversal by the recipient.

Why? To avoid revenue leakage where ITC is retained by the recipient even after the tax amount is credited back to the supplier via credit note.

How to Prove ITC Reversal?

Ans : No automated Goods and services tax system validation is available yet. So, suppliers must obtain a Certificate from a CA or CMA confirming that The recipient has reversed proportionate ITC.

What the CA/CMA Certificate Must Include:

Ans : CA/CMA Certificate Must Include in details of CA certificate. Details that CA/CMA Certificate must include:

1. Details of original invoice & corresponding credit note
2. Amount of ITC reversed by recipient
3. Mode of reversal – whether through GSTR-3B or DRC-03
4. Date of reversal
5. UDIN (Unique Document Identification Number) for traceability

No certificate = No deduction

Without this, deduction on credit note tax may be disallowed during audits or scrutiny.

Any exceptions to CA/ CMA certificate for taking credit note deductions?

Ans: YES – Exception (Small Value Transactions): If the tax amount involved is ₹5,00,000 or less per financial year, a self-declaration from the recipient is acceptable instead of CA/CMA certificate — but it must include full reversal details. If the total tax amount involved is ≤ ₹5,00,000 per financial year, then:

• A Self-declaration from the recipient is permitted
• Must still include all reversal details

When is the CA/ CMA certificate required?

Ans Applicable in case of GST Audit, Scrutiny, Investigation, Assessment proceedings. Even for prior financial years, this certificate can be submitted if demanded by authorities. Unless the certificate is furnished, the supplier cannot claim tax deduction on credit notes in case of post-sale discounts. Supplier must obtain a CA/CMA Certificate to claim deduction on tax via Credit Notes, confirming that: The recipient has reversed proportionate Input Tax Credit claimed earlier.

Draft CA Certificate Credit Note Deduction under GST

CA Certificate format while issue Credit Note Deduction