How to treat purchase Return under GST?
The purchase returns occur frequently in day to day business transactions. If you are new to these transactions, then this article is for you. The purchase return concept is treated slightly different in GST regime. Therefore, to understand this GST concept let us see about the purchase return.
What is purchase Return?
The purchase return is the return of the goods by the customer to the seller. In terms of GST it is a return by the recipient to the supplier of the goods. There may many reasons due to which the purchase return occurs. These includes reasons like faulty goods, short receipt, received in damaged condition, no proper documentation etc.
How to show purchase returns in GST filing?
In GST, purchase returns shall be shown in GSTR 1 return. There is one separate column in GST return where in the taxpayer can show the all the purchase return made during the given period. However, this is treated as “debit note” in GSTR 1 return. Therefore, one needs to show it under debit note column.
However, you should note that you have to enter the details of such debit notes related to sale of goods or services only. Because as per my opinion, the debit note will be added to your total sales of GSTR 1. If you have raised It for any other type of recover which does not attract GST then you should not show it under GSTR 1 . Similarly, the taxpayer will have to pay the taxes shown against such debit notes. Further, the debit note must be only raised if you have already booked the purchases against which you are raising such debit note.
Further in GSTR B you need to show taxable supplies as Total Value of outward supplies + value of debit notes. You may have to pay interest, if you are returning the goods on which you have already availed the input tax credit in past.
How to prepare purchase return documents?
The recipient of goods who is not registered under any tax system can directly refuse to accept the goods. He can do this simply by writing remarks on the documents received by the recipient. However, if he is registered under GST then he must prepare a “Debit Note” describing the details of goods with value and tax amount involved. You can download debit note format to prepare and send the debit note to the seller of such goods.
Therefore, this is all about purchase return concept under GST. Follow me on medium to see my next article on Sales return concept under GST.
