WFYI Articles

• GST Applicability on Incentives and Target-Based Credit Notes

  GST is not payable on credit notes issued without GST for sales targets, bonuses, or incentives to distributors, as they are financial/commercial adjustments, not taxable supplies under Section 15(3) or Section 34 of CGST Act. No ITC reversal is required by recipient, and no tax invoice needed from distributor, provided supplier does not reduce original output GST. Supported by MP AAR 01/2022 (Rajesh Kumar Gupta), KAR ADRG 76/2019 (Kwality Mobikes), and CBIC Circular 251/08/2025-GST.

  11/28/2025

• Understanding ITC Reporting and Reversal in GSTR-3B: Table 4(A)(5), 4(B)(1) and 4(B)(2) — Impact on GST Assessment

  In GSTR-3B, ITC must match GSTR-2B to avoid audit issues. Table 4(A)(5) shows eligible ITC (net of credit notes), 4(B)(1) records permanent reversals that cannot be reclaimed, and 4(B)(2) captures temporary reversals that can be reclaimed later. Correct classification and regular reconciliation prevent ITC loss, mismatches, and penalties during GST assessments.

  11/17/2025