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Debit note

16 August 2020

In april-2020 Goods for 5000 purchased gst-900
In August-2020 Goods worth 3000 returned gst-600
supplier issued debit note inturn should I issue credit note?

In gstr 1 which option should I click debit note or credit note ?

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6 Replies

ansh 99 (229 Points)
Replied 16 August 2020

Dear Abhishek selvam
have u made purchase or sale ???
its not clear

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 17 August 2020

@ Abhishek ji
If you purchased Goods for 5000 + GST 900 i.e 18% GSR Rate
Return that goods worth 3000 than GST amount should be 540, Not 600 (except goods include other rate items also)

if it's your purchase return, than you are required to issue debit note, and seller will issue you credit note against same.

GSTR return is return relating to sales and sales return, So, if this transaction is relating to purchase return, than you are not required to report that in GSTR 1

But in GSTR 3B you are required to reverse input tax credit taken at time time purchase relating to purchase return i.e 540/600 whichever is right

Abhishek Selvam O (374 Points)
Replied 17 August 2020

If I issue debit note is it mandatory for seller too issue credit note.

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 17 August 2020

If you issue debit note, means Purchase return, by that you Reversed you ITC.
Seller, if issue credit note, than that's sales return for seller, and reduction in output liability, and requires to pay less tax
So, it's beneficial for seller to issue credit note.

Abhishek Selvam O (374 Points)
Replied 17 August 2020

So if seller does not issue credit note means he cannot reduce liablity?

And is it mandatory to issue credit note by seller in turn though I have issued debit note?

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 18 August 2020

It's not mandatory for seller to issue credit note against your debit note.

U issue debit note, means it's purchase return for you, and you also Reversed the credit taken in your return.(Formalities on your side complated)

Now, Your purchase return means it's sales return for seller, if seller note issue credit note, than he can not show sale return in GSTR 1.(because in GSTR 1 saller required to show credit note for sales return)

So, if saler want to show sales return, and reduce its output tax liability than he has required to issue credit note.