Purchase return to registered vendor
A registered vendor is a person who is registered with GST authorities. For purchases from registered vendors for services attracting reverse charge, purchasers themselves has to pay tax to the government.
If exempted goods and services are purchased from registered Vendor, then no GST is to be paid to supplier or to the Government.
A buyer may have to return the goods or issue credit note due to various reasons like damaged goods, quality issues etc.
Process for purchase returns to registered vendor has been explained in this document.
Create a purchase return order or credit memo
- Choose the
icon, enter Purchase Return Order or Purchase Credit Memo, and then choose the related link. - Select Vendor on Purchase Credit Memo header, GST vendor type should be Registered.
- Select Item Code for goods, G/L Account for Service purchase, Fixed Asset for Fixed Asset purchase and Charge (Item) for Item Charge on Purchase Credit Memo line. GST Group Code, HSN/SAC Code, and GST Credit value should be selected as Availment if the tax input credit is available or else Non-Availment on the Item, G/L Account, Fixed Asset, Charge (Item).
For example, purchase credit memo or return order is issued for INR 10000 on which 18% GST (9% CGST and 9% SGST/UTGST in case of Intra-State or Intra-Union Territory transaction or 18% IGST in case of Inter-State transaction), has to be charged.
GST calculation appears in the Fact Box as following:
Component Amount GST Base Amount 10,000 CGST 900 SGST 900 IGST 1800 GL Entries for Intra-State or Intra-Union Territory purchase return of goods, service, fixed asset, and item charge to registered vendor where input tax credit is available are as following:
Particulars Amount Vendor Account 11800 SGST/UTGST Receivable Account -900 CGST Receivable Account -900 Purchase or Service Account or Fixed Asset increase during the year -10000 GL Entries for Intra-State or Intra-Union Territory purchase return of goods, service, fixed asset, and item charge to registered vendor where input tax credit isn't available are as following:
Particulars Amount Vendor Account 11800 Purchase or Service Account or Fixed Asset increase during the year -11800 GL Entries for Inter-State purchase return of goods, services, fixed asset, charge item to registered vendor where input tax credit is available are as following:
Particulars Amount Vendor Account 11800 IGST Receivable Account -1800 Purchase or Services Account or Fixed Asset increase during the year -10000 GL Entries for Inter-State purchase return of goods, services, fixed asset, charge item to registered vendor where input tax credit isn't available are as following:
Particulars Amount Vendor Account 11800 Purchase or Services Account or Fixed Asset increase during the year -11800