Section 43 was the mirror of section 42 for credit notes: a supplier's reduction of tax was to be matched against the recipient's reduction of credit. It was never operated and was omitted from 01.10.2022; a similar control now sits in the proviso to section 34(2).
Key points
- Section 43 of the CGST Act, 2017 was omitted by the Finance Act, 2022 with effect from 01.10.2022 (Notification 18/2022-Central Tax).
- It provided for matching credit notes issued by a supplier with the corresponding reduction of credit by the recipient, with unmatched reductions added back to the supplier's liability with interest.
- From 01.10.2025 the proviso to section 34(2) serves the same purpose: a supplier may reduce its tax on a credit note only if the registered recipient has reversed the credit.
The provisions
43Matching, reversal and reclaim of reduction in output tax liability (omitted)
Statutory text
*Section 43. 1[***]
* Enforced w.e.f. 22nd June, 2017.
1. Omitted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022) by s. 107 of The Finance Act 2022 (No. 6 of 2022) for
Section 43. Matching, reversal and reclaim of reduction in output tax liability. -
(1) The details of every credit note relating to outward supply furnished by a registered person (hereafter in this section referred to as the "supplier") for a tax period shall, in such manner and within such time as may be prescribed, be matched-
(a) with the corresponding reduction in the claim for input tax credit by the corresponding registered person (hereafter in this section referred to as the "recipient") in his valid return for the same tax period or any subsequent tax period; and
(b) for duplication of claims for reduction in output tax liability.
(2) The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for input tax credit by the recipient shall be finally accepted and communicated, in such manner as may be prescribed, to the supplier.
(3) Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for input tax credit or the corresponding credit note is not declared by the recipient in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed.
(4) The duplication of claims for reduction in output tax liability shall be communicated to the supplier in such manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the supplier, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.
(6) The amount in respect of any reduction in output tax liability that is found to be on account of duplication of claims shall be added to the output tax liability of the supplier in his return for the month in which such duplication is communicated.
(7) The supplier shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if the recipient declares the details of the credit note in his valid return within the time specified in sub-section (9) of section 39.
(8) A supplier in whose output tax liability any amount has been added under sub-section (5) or sub-section (6), shall be liable to pay interest at the rate specified under sub-section (1) of section 50 in respect of the amount so added from the date of such claim for reduction in the output tax liability till the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the supplier by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the recipient.
(10) The amount reduced from output tax liability in contravention of the provisions of sub-section (7) shall be added to the output tax liability of the supplier in his return for the month in which such contravention takes place and such supplier shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Is section 43 of the CGST Act still in force?
- No. It was omitted from 01.10.2022 without having been operated. The proviso to section 34(2) now links a supplier's credit note to the recipient's reversal of credit.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The omitted text is in the notes below. The control it intended now operates through the Invoice Management System and the proviso to section 34(2), under which the supplier's reduction depends on the recipient's reversal of credit.