How to treat Sales Return in GST?
The sales returns occur frequently in day to day business transactions. If you are new to these transactions, then this article is for you. The sales return concept is treated slightly different in GST regime. Therefore, to understand this GST concept let us see about the sales return process.
What is sales return in GST?
The sales return is the return of the goods by the customer to the supplier or seller. In other words the recipient of goods return back the goods to the supplier. Thus, 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 sales return occurs. These includes reasons like faulty goods, short receipt, received in damaged condition, no proper documentation etc.
How to show sales returns in GST filing?
In GST, sales 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 sales return made during the given period. However, this is treated as “credit note” in GSTR 1 return. Therefore, one needs to show it under credit note column. Thus, the supplier of goods shall raise credit note on the customer against the material received back.
However, one should note that you have to enter the details of such credit notes related to sale of goods or services only. Because as per my opinion, the credit note will be deducted from your total sales of GSTR 1. If you have raised It for any other type of recovery which does not attract GST then you should not show it under GSTR 1. Further, the credit note must be only raised if you have already booked the sales against which you are raising such credit note. Further in GSTR3 B you need to show taxable supplies as Total Value of outward supplies — value of credit notes.
Why there is a need to raise credit note for sales return in GST?
One needs to raise credit note under GST because as a supplier you must have already declared the sales and paid the tax amount on such sales in the previous month. Therefore, if you receive goods back in the current month you cannot modify the previous months sales declared in GSTR 1. Therefore, in order to adjust the sales you need to raise credit note and show it in GSTR 1. This will reduce your total sales after considering sales return.
How to prepare sales return documents?
The recipient/purchaser 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. Similarly, the seller can raise credit note on the supplier can take back the goods in stock again. you can download credit note format to prepare and send the credit note to the purchase of such goods.
Therefore, this is all about sales return concept under GST. Follow me on medium to read my future blogs on credit note, debit note, sales invoices, e way bill etc.
