Chapter 12

Certificate under Circular No. 212/6/2024-GST Credit Reversal for Post Supply Discounts

Independent Practitioner's Certificate in respect of proportionate reversal of input tax credit as required by CBIC Circular No. 212/6/2024-GST dated 26^th June 2024.

Name and Address of the Applicant

1. This Certificate is issued in accordance with the terms of our agreement dated ..................

2. M/s .......................................................... (hereinafter referred as “Supplier”) is having GSTIN ..........................................................(Registration with effect from ..............................................) and is having principal place of business at .......................................................... and Supplier has following additional places of business:

(a) ___________________________________________

(b) ____________________________________________

3. M/s ..........................................................(hereinafter referred as “Recipient”) is having GSTIN .......................................................... (Registration with effect from .............................................) and is having principal place of business at................................................................ Supplier has following additional places of business: 

(a) __________________________________________

(b)    __________________________________________

4. Central Board of Indirect Taxes & Customs (‘CBIC') has issued Circular No. 212/6/2024-GST dated 26^th June 2024 (hereinafter referred to as “Circular”) to provide a mechanism for providing evidence of compliance of condition of clause (b)(ii) of sub-section (3) of section 15 of the Central Goods and Services Tax Act, 2017 (in short “CGST Act”). As per section 15(3)(b)(ii) of the CGST Act, where discounts are offered by the suppliers through tax credit notes, after the supply has been effected, the said discount is not to be included in the taxable value only if the input tax credit attributable to the said discount is reversed by the recipient. 

5. Paras 2.4 and 2.5 of Circular require that in order to verify as to whether the input tax credit attributable to such discounts offered through tax credit notes has been reversed by the recipient or not, the supplier may procure a certificate from the recipient of supply, issued by the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that the recipient has made the required proportionate reversal of input tax credit at his end in respect of such tax credit note issued by the supplier.

Responsibility of Management of the Recipient

6. Management of the Recipient is responsible for preparation, maintenance and submission of records in relation to requirements for verification and validation that input tax credit attributable to any discount given after the supply has been affected is duly reversed in compliance with Section 15(3)(b)(ii) of the CGST Act. 

7. Management of the Recipient is responsible to ensure that books, records documents and information made available for purposes of verification are truthful and reliable, extracted from contemporaneous records for the purposes of establishing reliability of assertions made by them.

Practitioner's Responsibility

8. Pursuant to requirements of Circular, our responsibility is to verify and validate that the Recipient has made the required proportionate reversal of input tax credit at his end in his return in FORM GSTR 3B/DRC-03/other relevant document in respect of tax credit note(s) issued by the Supplier 

9. All details which are required to be furnished in the certificate have been provided by the Management (of the Recipient) to us. The authorship of underlying data based on which the present certificate has been issued, will not be ours but will always be with them (Management of the Recipient).

10. We have conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised 2016) issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

Opinion

11. The present certificate is limited to statement of fact and does not form any opinion. The certificate traces the required proportionate reversal of input tax credit at the end of the Recipient via FORM GSTR-3B/DRC-03/ other relevant document in respect of credit note(s) issued by the Supplier during the period.......................

12. Based on our examination as above and the information and explanations given to us, in our opinion, amount of Rs. ___________________ being CGST, SGST/ UTGST, IGST and Cess has been reversed by the Recipient in respect of credit note(s) issued by the Supplier via FORM GSTR-3B/DRC-03/ other relevant document during the period................ The details are given below:

^# Where a credit note is issued for multiple invoices, the aforementioned details pertaining to all such invoices need to be given for that credit note.

Restriction on Use

13.This certificate is issued for the purpose of verification of compliance of condition under Section 15(3)(b)(ii) of the CGST Act &SGST/UTGST Act of proportionate reversal of input tax credit by the Recipient via FORM GSTR-3B/DRC-03/other relevant document in respect of the tax credit note(s) issued by the Supplier during the period ................... as required under Circular No.212/6/2024-GST dated 26^th June 2024 issued by CBIC. This certificate should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing.

Place of Signature: _______

Date: ______________

Checkpoints for Chartered Accountants -

1.  The Certificate by a Chartered Accountant should be issued when the amount of tax (CGST+SGST or IGST and compensation cess, if any) involved in the discount given by the Supplier to a Recipient through tax credit notes in a Financial Year exceeds Rs. 5,00,000 (Rupees five lakhs only)

2. The said CA certificate may include details of the tax credit notes, details of the relevant invoice number against which the said credit note has been issued, the amount of input tax credit reversed in respect of each of the said credit notes along with the details of the FORM GSTR 3B/Form GST DRC-03/any other relevant document through which such reversal has been made by the Recipient.

3. The certificate issued by CA shall contain UDIN (Unique Document Identification Number).

4. Verification must start with the total input tax credit reversal informed by Recipient and therefrom the scenarios that are outside the scope of this Circular (illustrated below) must be excluded to arrive at the extent of reversal to be considered for certification.

✓ Credit notes issued for reasons that do not impact the GST liability, such as accounting adjustments, price adjustments unrelated to supply, or clerical corrections

✓ Credit notes issued after the statutory time limit (i.e., after October of the following financial year or filing of the annual return, whichever is earlier) as they do not qualify for input tax credit adjustment under GST law.

✓ Reversals due to non-payment to the supplier within 180 days, as required under second proviso to Section 16(2) of the CGST Act 

✓ Reversals related to blocked credits (such as motor vehicles, personal consumption, etc.) since these are statutory disallowances under Section 17(5) of the CGST Act and unrelated to post-supply adjustments covered by tax credit notes.

✓ Reversal due to non-compliance of conditions relating to return of inputs and capital goods sent on job work (under Section 19 of the CGST Act) 

✓ Reversals due to the wrongful claim of input tax credit in previous periods (such as clerical errors or duplicate claims)

5. Cross-check whether the credit note issued by the Supplier is reflected in the Recipient's Form GSTR-2B for the respective month. 

6. Care must be taken to note:

a) Tax period in which credit note(s) is issued by the Supplier;

b) Tax period in which input tax credit is reversed in FORM GSTR3B/DRC-03/other relevant document