Set off of Debtors and Creditors, Accounting - Auditing

[Jitendra Sahu]

Dear Seniors and Colleague

I need your advice on Creditors/Debtors balance adjustment without payment..
1. Our creditors are agree to give Credit note to waive off all the outstanding without any GST effect means "Financial Credit Note"

2. Similarity our debtors are also not in a position to pay and we accept to issue Credit Note from our Side without any GST effect means " Financial Credit Note."

What should precautions we have to take and what type of documentation we have to maintain for that.
Please suggest with refering some laws.

Posts / Replies

[YAGAY andSUN]

These types of transactions are allowed in Income Tax Act, GST Laws but under the provisions of GST Laws on interconnected units if such book adjustment is done, then on such books adjustments GST at applicable rate will be applicable.