This circular provides guidance on the procedure for evidencing compliance with Section 15(3)(b)(ii) of the CGST Act, which requires that the recipient of goods or services reverses the proportionate Input Tax Credit (ITC) attributable to discounts offered by suppliers through tax credit notes issued after the supply.

As there is currently no functionality on the GST portal to verify such ITC reversals, suppliers may obtain a certificate from a Chartered Accountant (CA) or Cost Accountant (CMA) confirming that the recipient has duly reversed the ITC corresponding to the discount. The certificate should include invoice and credit note details, ITC reversal amounts, and relevant references such as FORM DRC-03.

For cases where the total tax involved in discounts does not exceed ₹5,00,000 per financial year, the supplier may instead obtain a self-declaration from the recipient confirming ITC reversal. These CA/CMA certificates or recipient undertakings will be treated as valid evidence of compliance under Section 15(3)(b)(ii) for verification during audit, scrutiny, or investigation.