How to handle challan and returns in GST Regime

How to handle challan and returns in GST Regime

How to insert purchase or sales invoice reference no while making returns


Settlement process for Sales and Expiry returns. 

As per GST provisions, the return of goods (both Expired and Saleable material) can be treated in the following manner when a customer is registered under GST (Not Composition) –

1. Returns to Supplier pertaining to goods purchased prior to 1st July 2017 –

Customer to treat this as a supply and therefore must issue a Tax Invoice with GST

2. Returns to Supplier pertaining to goods purchased on or after 1st July 2017 and before filing an annual return for following financial year –

Supplier to issue a Credit note with GST

Books and GST returns of Customer and Supplier should reconcile to avoid any loss of GST Input Credit to both the parties. Hence, we propose to implement the following process for settlement of Expiry and Sales returns -

Steps to be performed by Customer and Supplier

1. Customer to send goods under Delivery Challan to Supplier. (Use Adjustments-Purchase return menu option)


2. Expired and Saleable material to be sent separately under different Delivery Challans.

The following stamping to be done on Delivery Challan –

For Expiry/ Leakage and Breakages - “Leakage/Breakage/Expired goods not for sale & consumption.”

For Non-moving Saleable returns - “Non-moving/ Non-saleable goods return to

supplier”


3. Goods will be received at Supplier End and segregated to identify returns pertaining to

(A) Pre-GST purchases and (B) Post-GST purchase from Supplier


3A. For goods pertaining to Pre-GST Purchases from Supplier

(i) Proforma Invoice with product and price details to be sent to the Customer by Supplier as per physical stocks received from the Customer (Supplier will Use adjustment menu-sales return option)

(ii) When Customer is registered under GST and not under Composition

Customer to issue Tax Invoice basis the details provided by Supplier and send it in soft copy within 7 Days of receipt of Proforma Invoice from Supplier.

Tax Invoice issued by the Customer should capture the Proforma Invoice number in respect of which the Tax Invoice is issued. (Customer will use purchase return (tax invoice) option under Adjustment menu and enter proforma invoice no in Ref no column header part. By pressing F5 in Purchase Return (Tax Invoice), the Customer will be able to select entries already done in purchase return option. By pressing F12, purchases history can be seen and by pressing F9, an invoice ref. can be selected.)

(iii) Supplier to issue Credit Note with GST based on Tax Invoice issued by Customer. (Supplier will use Sales return (tax invoice) in the adjustments menu. By pressing F6, sales history can be seen and by pressing F9, the invoice ref. Can be selected.

(iv) In case Customer fails to Issue Tax Invoice within 7 Days, Supplier will issue Credit note without GST reimbursement (Supplier will use Adjustments - Sales Credit Note option. Old entries already done can be selected by pressing the F5 key). Please avoid it.

3B. For goods pertaining to Post-GST Purchases from Supplier.

(i) Supplier to issue Credit Note with GST to the Customer (Supplier will use Adjustments-Sales Credit Note)

(ii) Customer must reverse GST Input Credit equivalent to GST reimbursed on Credit Note by Supplier (Customer will use Adjustments-Purchase debit note option)

(iii) In case the Customer fails to reverse the GST Input Credit as mentioned in the point above, Supplier will not be able to claim set-off of such GST and may also be liable to pay interest as applicable to Government. In such cases, Supplier reserves the right to recover the GST amount with such interest from the Customer through Debit Note. (Supplier will use sales debit note option)

Note – Point number 3A(ii) & 3B(iii) mentioned in the table above will also apply to Credit Note issued by Supplier because of the price difference in supplies.


Settlement process for Sales and Expiry returns. As per GST provisions, the return of goods (both Expired and Saleable material) can be treated in the following manner when Customer is unregistered or GST (Composition) 

Supplier to issue a Credit note without GST

. When goods are returned to the company, GST is deposited to Government and is reimbursed by the company. Since

Supplier is not getting GST input in his pocket, so he cannot give it away from his pocket. So NO GST CAN BE PROVIDED TO UNREGISTERED OR GST COMPOSITION CUSTOMER.

Hence, we propose to implement the following process for settlement of Expiry and Sales returns -

Steps to be performed by Customer and Supplier

1. Customer to send goods under Delivery Challan to Supplier. (Use adjustments-purchase return option)

2. Expired and Saleable material to be sent separately under different Delivery Challans.

The following stamping to be done on Delivery Challan –

For Expiry/ Leakage and Breakages - “Leakage/Breakage/Expired goods not for sale & consumption.”

For Non-moving Saleable returns - “Non-moving/ Non-saleable goods return to

the supplier.”

3. Goods will be received at Supplier End and entered in Adjustments menu- Sales return option.

4. Supplier to issue Credit Note without GST to Customer (Supplier will use Adjustments-Sales Return Invoice option)

5. Customer to enter credit note using Adjustments-Purchase Return Invoice option.


It will also apply to Credit Note issued by Supplier because of the price difference in supplies.


Looking forward to your valuable suggestions and comments. Please use 16,2,25 or later version. You may download the attached file and read the same. Please provide feedback or comment on the same.

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