Can we settle in payment if sale and purchase from and to same party.

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This query is : Resolved

Quick Summary

When a business buys and sells goods with the same party, payments can be netted off instead of bill-by-bill settlement. Monthly netting of receivables and payables is allowed and does not impact GST ITC claims or income tax compliance if properly recorded in books.

Mohit Gupta

Mohit Gupta (Querist)
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09 June 2023 Hi,

We are buying goods from a firm and selling goods to same firm often.

So, do we need to do each and every payment from one firm to another bill by bill.

Or we can settle in this payment against all sale and purchase.

By above line i mean to say,
Let us say on 15th of every month we check which firm is having credit balance on another and transfer that amount.

Will it have impact on ITC/GST or income tax. ??