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.
The rates and amounts below are illustrative. Check the return's GST group, credit treatment, and jurisdiction against the original purchase before posting.
Create a purchase return order or credit memo
- [!INCLUDE [open-search](../../includes/open-search.md)] Purchase Return Orders or Purchase Credit Memos, and then choose the related link.
- Select Vendor on Purchase Credit Memo header, GST vendor type should be Registered.
- Select Item for goods, G/L Account for services, Fixed Asset, or Charge (Item) on the credit memo line. Check GST Group Code and HSN/SAC Code. Set GST Credit to Availment or Non-Availment, as appropriate.
The GST details are initially copied from the selected item, account, asset, or charge. For registered vendors, GST Reverse Charge follows the selected GST group. The examples below show ordinary purchases, not reverse charge returns.
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