For past periods, suppliers can also provide CA/CMA certificates or recipient undertakings as evidence of the required input tax credit reversal to tax authorities.

The Central Board of Indirect Taxes and Customs (CBIC) has issued a circular, stating the procedure for suppliers to provide evidence of compliance with Section 15(3)(b)(ii) of the Goods and Services Tax Act, 2017, while clarifying that Such certificates issued by the CA/CMA or the undertakings/ certificates issued by the recipient of supply, as the case may be, shall be treated as a suitable and admissible evidence for the purpose of the Section 15(3)(b)(ii) of the Central GST Act, 2017. When suppliers offer discounts through tax credit notes after the supply has been made, these discounts are excluded from the taxable value only if the recipient reverses the input tax credit attributable to the discount, as required by Section 15(3)(b)(ii) of the CGST Act, 2017. The Board has received feedback from trade and field formations indicating the lack of a facility on the common portal for suppliers and tax officers to verify if the recipient has reversed the input tax credit for the discount. A request has been made to develop a mechanism for suppliers and tax officers to verify compliance with Section 15(3)(b)(ii) regarding the proportionate reversal of input tax credit by recipients for discounts given through tax credit notes after supply. The Board has clarified that discounts offered via tax credit notes, per Section 34 of the CGST Act, can be excluded from the taxable value only if Section 15(3)(b)(ii) conditions are met. This includes the recipient’s reversal of input tax credit attributable to the discount. Currently, there is no functionality on the common portal to verify this compliance. Until such a feature is available, suppliers can obtain a certificate from the recipient, issued by a Chartered Accountant (CA) or Cost Accountant (CMA), confirming the necessary input tax credit reversal. These certificates, or undertakings from the recipient, will serve as admissible evidence under Section 15(3)(b)(ii) of the CGST Act, 2017. Suppliers must present these certificates during any tax proceedings, such as audits or investigations. For past periods, suppliers can also provide CA/CMA certificates or recipient undertakings as evidence of the required input tax credit reversal to tax authorities.