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Cancellation of purchase

Shivani (Learner) (1881 Points)

22 January 2016

Dear Friends

We pass entry of Cancellation of Purchase in Tally in debit note.

what i need to know what is cancellation of sales?

regards

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9 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 22 January 2016

It is done through credit note entry

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Shivani (Learner) (1881 Points)
Replied 23 January 2016

Dear Mam

what is cancellation of sales/purchase?

does it mean invoice issued, goods not delivered yet and one of the party cancells the sale.

so in a way its a way to cancel out the invoice already issued?

regards

CMA Poornima Madhava (CMA) (13112 Points)
Replied 23 January 2016

Yes, credit note is raised to record sales return transactions

Shivani (Learner) (1881 Points)
Replied 24 January 2016

no mam what i am asking is what is the different between sales cancellation and sale return.

CMA Poornima Madhava (CMA) (13112 Points)
Replied 24 January 2016

There is nothing called sales cancellation. Sales return is for reversing the sales transaction. It can be due to various reasons such as non acceptance by the customer, defective supply resulting in return of items etc

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Shivani (Learner) (1881 Points)
Replied 26 January 2016

No mam

in chandigarh and punjab vat returns, separate details are required to be filled regarding sale returns and sales cancellation so there ought to be some difference.

also in tally though both the entries go into the credit note, there is a separate vat adjustment for both of them.

i am unable to find out the meaning of sales cancellation though.

any thoughts?

CMA Poornima Madhava (CMA) (13112 Points)
Replied 27 January 2016

You are right.... There is a difference but it is just for the sake of VAT returns in Punjab. In accounting terminology, both are same. Here is the difference for the sake of Punjab VAT:

Sales Cancellation: Sale price of taxable goods where such sale was cancelled: Provided that the deduction shall be claimed only, if the person is in possession of all copies of VAT invoice or Retail invoice.
Sales return: Sale price, in respect of any goods , returned within a period of six months: Provided that a taxable person shall claim the deduction only on the basis of debit note, issued by the purchaser for the goods returned.

Shivani (Learner) (1881 Points)
Replied 29 January 2016

Dear Mam

thanks for your continuous support.

It seems from reading the section you mentioned that in case of sale returns the goods have been delivered to the buyer and seller is claiming vat reversal on basis of debit note received by him from the buyer.

and in case of sale cancellation the good have NOT been delivered but invoice has been prepared and due to some reason the sales has been cancelled and now the seller is claiming vat reversal on basis of invoice copies he has. He must be in possession of all copies of invoice as he has not sent any of them to buyer as sale failed to materialise.

do u agree mam?

regards