Amendment to Section 34: Conditions for Reducing Output Tax Liability
The amendment to Section 34 of the Central Goods and Services Tax Act introduces a new proviso in sub-section (2). This change specifies conditions under which a supplier cannot reduce their output tax liability using a credit note. Firstly, if the input tax credit related to the credit note has been claimed by the recipient but not reversed, the supplier cannot reduce their tax liability. This applies when the recipient is a registered person. Secondly, if the tax incidence on the supply has been transferred to another person, the supplier is not allowed to reduce their tax liability. These conditions are put in place to ensure proper tax credit reversal and prevent tax benefits from being improperly passed along the supply chain.
Note: It is an AI generated summary for reference purpose only.
Amendment of section 34.
126. In section 34 of the Central Goods and Services Tax Act, in sub-section (2), for the proviso, the following proviso shall be substituted, namely:––
“Provided that no reduction in output tax liability of the supplier shall be permitted, if the––
(i) input tax credit as is attributable to such a credit note, if availed, has not been reversed by the recipient, where such recipient is a registered person; or
(ii) incidence of tax on such supply has been passed on to any other person, in other cases.”.
