The GST Policy Wing of India’s Ministry of Finance issued this circular to clarify the mechanism for suppliers to provide evidence of compliance with Section 15(3)(b)(ii) of the CGST Act, 2017. This section pertains to discounts offered after the supply has been effected, which can be excluded from the taxable value only if the input tax credit (ITC) attributable to the discount is reversed by the recipient.

Suppliers and tax officers currently lack a system on the common portal to verify ITC reversals. Until such a system is available, suppliers must obtain a certificate from the recipient’s Chartered Accountant (CA) or Cost Accountant (CMA). This certificate should include details of credit notes, relevant invoices, and ITC reversal documents, verified through the UDIN system. For discounts not exceeding Rs 5 lakh in a financial year, an undertaking from the recipient is sufficient.