GST Credit Note Adjustment – A New Compliance Challenge

 GST Credit Note Adjustment – A New Compliance Challenge

The Finance Act 2025 has introduced a crucial amendment to Section 34(2) of the CGST Act, stating that a supplier can adjust their output tax liability via a credit note only if the recipient has reversed the corresponding Input Tax Credit (ITC). I feel there are challenges in implementing the same Verification Issues – There is currently no mechanism on the GST portal for suppliers to verify whether the recipient has reversed ITC, leading to complexity Increased Compliance Burden – Suppliers now bear an additional responsibility to ensure ITC reversal before issuing a credit note, increasing operational complexity. Potential Disputes – If the recipient fails to reverse ITC, the supplier may not be able to adjust their output tax liability, creating financial and legal challenges.

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