GST - DEBIT NOTE, KYC

Introduction

A supplier of goods or services or both is mandatorily required to issue a tax invoice. However, during the course of trade or commerce, after the invoice has been issued there could be situations like:

• The supplier has erroneously declared a value which is less than the actual value of the goods or services or both provided.

• The supplier has erroneously declared a lower tax rate than what is applicable for the kind of the goods or services or both supplied.

• The quantity received by the recipient is more than what has been declared in the tax invoice.

• Any other similar reasons.

In order to regularize these kinds of situations the supplier is allowed to issue what is called as debit note to the recipient. The debit note also includes supplementary invoice.

Meaning

When a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing the prescribed particulars.

Format

There is no prescribed format but debit note issued by a supplier must contain the following particulars, namely:

(a) name, address and Goods and Services Tax Identification Number of the supplier;

(b) nature of the document;

(c) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special
characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(d) date of issue;

(e) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;

(f) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered;

(g) serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;

(h) value of taxable supply of goods or services, rate of tax and the amount of the tax debited to the recipient; and

(i) signature or digital signature of the supplier or
his authorized representative

Tax liability

The issuance of a debit note or a supplementary invoice creates additional tax liability. The treatment of a debit note or a supplementary invoice would be identical to the treatment of a tax invoice as far as returns and payment are concerned.

Records

The records of the debit note or a supplementary invoice have to be retained until the expiry of seventy two months from the due date of furnishing of annual return for the year pertaining to such accounts and records. Where such accounts and documents are maintained manually, it should be kept at every related place of business mentioned in the certificate of registration and shall be accessible at every related place of business where such accounts and documents are maintained digitally.

Conclusion

The debit note or a supplementary invoice is therefore a convenient and legal method by which the value of the goods or services in the original tax invoice can be enhanced. The issuance of the debit note will easily allow the supplier to pay his enhanced tax liability in his returns without requiring him to undertake any other tedious process.

Circular No.        /2017-Customs F.No.450/178/2015-CUS- IV                                     Subject: - Know Your Customer (KYC) norms-regarding                                            Kind reference is invited to Board’s Circular Nos. 07/2015-Customs dated 12.02.2015 and 13/2016-Customs dated 26.04.2016 on the subject cited above.  

2.               In line with the KYC norms stipulated by the Reserve Bank of India, Board had decided that two documents, one for proof of identity and other for proof of address are required for KYC verification. However, in case of individuals, if any one document listed in the Board Circular No. 9/2010-Cus dated 08.04.2010 contains both proof of identity and proof of addresses, the same would suffice for the purposes of KYC verification. Aadhaar card had also been recognised as one of the document for individuals. Board had further relaxed KYC norms for individual, in view of the problem being faced by individuals who possess proof of identity in the form of prescribed document but their address of present stay is not mentioned in the proof of identity. Moreover, many a times, it is difficult for individuals to produce present/current proof of address. For such cases, it was decided that proof of identity collected by the representative of the authorized courier at the time of delivery of such consignments to an individual consignee along with recording of address of the place where such consignments would be delivered to the consignee by the authorized courier companies, would suffice for KYC verification [Circular No. 13/2016-Customs dated 26.04.2016 refers]. In order to further simplify and clarify the procedure in this regard, Board has decided that in case of import or export through courier by an individual, Aadhaar card or passport or PAN or Driving License or Voter ID card shall suffice for KYC verification however recording of address of place of delivery, as mentioned above, would continue.

Board has also decided to simplify the norms for KYC verification in the light of introduction of Goods & Services Tax (GST) and in view of the emphasis of government on adoption of a unified identifier. Accordingly, in modification of the earlier instructions, in the case of import or export through courier by a firm, company, institution, registered under the GST laws, GSTIN shall suffice as the document for the purpose of KYC verification. In cases where the firm, company or institution is not registered under GST laws, Unique identification Number (UIN) or PAN shall serve as the document for KYC verification.