Question72: My client is distributor/stockiest and receives Turnover Discount at the end of the year, and shares the discount with his purchasers at the time of the sale. But this year the Manufacturer supplier has not issued the Credit Notes for discounts on Turnover, whereas he has already parted with the discounts with his customers. This has resulted in accumulation of Tax Credit. How to adjust this excess credit of input tax. While the purchase value is booked is higher than the acutal sale value, how to adjust that in the Balance Sheets at the end of the year.

Answer Please note that accounting in financial records and accounting in GST records will vary from time to time. So the turnover/ Purchase in financial records may differ from turnover in GST records. The credit will be recorded when it is given or received. So far as the balance of ITC is concerned you can carry forward the same in next financial year. So the balance of ITC is not going to affect profitability . For the purpose of financial accounting you can make provision in accounts if the same is permitted /required as per Accounting standard and Income tax act. (Reply dt. 13/3/2018)