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What is the accounting treatment for defectives product

Ks (Ac) (138 Points)

04 February 2022

what is the accounting treatment for defectives product received by firm ???

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3 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 04 February 2022

Return them back to the supplier ,and prepare Debit Note against original purchase Invoice and pass entry in their books of accounts in your Firm .

Trader Creditors A/c Dr
To Purchase return A/c Cr
To CGST. A/c Cr
To SGST. A/c Cr
( Defective products return to Supplier )

However as per section 34 of the CGST act , under GST law supplier can only issue Credit Note to you against original Invoice and show in GSTR1 . you have to do agestment in GSTR3B

Pass entry in

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Nidhi (Chief Accountant) (3150 Points)
Replied 04 February 2022

Return back the good to supplier along with debit note. Supplier will issue u a credit note and they will show that in their GSTR 1.
After that u r required to reverse the ITC taken based on CN uploaded by supplies and reflected in GSTr 2B