Answer

1. F

   Facts

   If the supplier issues a credit note for the waived amount including tax, your ITC reduces by the tax on it. If no credit note is issued, the waived part stays unpaid and Rule 37 can apply.

2. P

   Provisions and law

   • Sec 34, CGST Act 2017Credit notes and debit notes adjust tax on an invoice; a credit note must be declared by 30 November after the year or the annual return, whichever is earlier.
   • Rule 37, CGST Rules 2017If the supplier is not paid within 180 days of the invoice, the proportionate ITC is shown as reversed in the GSTR-3B for the tax period immediately after the 180 days, with interest under Sec 50; it is re-availed once payment is made. Not applicable to reverse charge supplies, and to deemed supplies without consideration.
3. A

   Analysis

   Ask the supplier for a GST credit note so tax on the waived part is adjusted on both sides. A financial credit note without GST does not reduce ITC, and the amount remains unpaid for Rule 37. Agree the type of credit note in the settlement letter.

4. C

   Conclusion

   1. 1Agree on a GST credit note in the settlement.
   2. 2Reduce ITC by the tax in the credit note.
   3. 3If only a financial note, reverse ITC on the waived part.
   4. 4Keep the settlement letter.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.