I have sold goods @ 12% to a customer at Rs. 1000+GST(1120) prior to 18-07-2022. The same Goods was returned on 30-07-2022. But after 18-07-2022 the tax rate changes to 18%. Now as per law I have to take return of goods at Rs. 1180. How can I deal with the situation. Here, suppler have an credit of Rs. 60 on account of ITC (Tax paid Rs. 120- Tax on Return Rs. 180). Please reply Immediately Sir..
07 July 2024
In the scenario you described, where you sold goods at 12% GST prior to 18th July 2022 and the customer returned the goods after 18th July 2022 when the GST rate increased to 18%, here’s how you can handle the situation:
### Calculation and Adjustment Steps:
1. **Original Sale Transaction (Before 18th July 2022):** - Sale Price: Rs. 1000 - GST @ 12%: Rs. 120 - Total Invoice Amount: Rs. 1120
2. **Return of Goods (After 18th July 2022):** - Revised Sale Price: Rs. 1180 (including GST @ 18%)
3. **Adjustment of Input Tax Credit (ITC):** - Original GST Charged: Rs. 120 - GST on Return @ 18%: Rs. 180 - Credit Note Value: Rs. 1180
### Steps to Adjust the Credit Note:
1. **Issue a Credit Note:** - Issue a credit note to the customer for Rs. 1180. Mention the revised sale price and the adjusted GST amount of Rs. 180 (18% on Rs. 1000). - Clearly specify that this credit note is being issued due to the return of goods after the change in GST rate.
2. **Adjustment of ITC:** - Reverse the ITC claimed on the original sale (Rs. 120) as per GST rules since the goods are returned and the tax amount applicable has increased. - You have already mentioned a credit of Rs. 60 on account of ITC (Tax paid Rs. 120- Tax on Return Rs. 180).
- Ensure the credit note and adjustments are made in accordance with GST rules and regulations. - Maintain proper documentation and records of the credit note issued and the adjustments made. - Reflect these changes accurately in your GST returns (GSTR-1, GSTR-3B) for the respective tax periods.
### Conclusion:
By issuing a credit note for Rs. 1180 and adjusting the ITC accordingly, you align with GST compliance requirements while accommodating the change in GST rate post-sale. If you need further assistance with specific accounting entries or compliance aspects, consulting with a tax advisor or GST expert would be advisable to ensure accurate handling of this transaction.
CAclubindia
