Ledger reconcallation - Books entry

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This query is : Resolved

Amandeep Singh (Querist)

01 June 2023 Sir,

Supplier pass the entry in his books dt.31.10.2022 (Goods damage) and Clear the balance no document send to us and no show his GSTR-1 but as per our books Supplier balance cr. Rs. 7400/- as on 31.03.2023. so clear the Balance we need to pass the entry in our books also.
Query.
1. Can we need to reverse the ITC or reduces the Purchase Rs.7400/- If we need to reverse the ITC we unable to issue debit note entry in oct.22 because we already issue debit note to other supplier so debit note number change. so can we issue the debit note in March 2023 and adjusted the ITC reversal amount in May 2023,s return because i already filed the GSTR-3B march and april month.
Please advise Sir,

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

09 July 2024 In this scenario, where you need to clear the balance with your supplier due to goods damaged and a credit balance in your books, here’s how you can proceed:

### Steps to Resolve the Issue:

1. **Passing Entry in Your Books:**
- Since the supplier has already adjusted the balance due to goods damaged in their books, you need to adjust your accounts accordingly.
- Debit the Supplier Account (to reduce the credit balance) with ₹7,400.
- Credit the Input Tax Credit (ITC) Account (if you had claimed ITC on these purchases) with ₹7,400.

**Entry:**
```
Supplier Account Dr. ₹7,400
Input Tax Credit (ITC) Account Cr. ₹7,400
```

2. **Adjustment of ITC:**
- If you had claimed Input Tax Credit (ITC) on the original purchase, you should reverse the ITC corresponding to the amount now credited to the supplier.
- Adjusting ITC involves reducing the amount of ITC claimed earlier. You will need to reverse this ITC in your GSTR-3B return for the relevant period.

3. **Debit Note Issuance:**
- You mentioned issuing a debit note to adjust the balance. Since you already issued a debit note to another supplier in October 2022, and the number has changed, you can issue a new debit note in March 2023 to the affected supplier.
- The new debit note should specify the reason for adjustment (goods damaged), date it appropriately, and include it in your accounting records.

4. **Adjustment in GST Return:**
- Since you’ve already filed GSTR-3B for March and April, and you plan to adjust the ITC reversal in May 2023, ensure that you include this adjustment in your next filing.
- Include the revised figures for ITC reversal and ensure your returns reflect the correct adjustments.

### Important Considerations:
- **Documentation:** Maintain proper documentation of the debit note issued and the adjustment made in your books for audit and compliance purposes.
- **Compliance:** Ensure that all adjustments are in line with GST regulations to avoid any penalties or non-compliance issues.
- **Consultation:** If in doubt, consult with your tax advisor or accountant to ensure proper handling of ITC reversal and compliance with GST rules.

By following these steps, you can effectively clear the balance with your supplier, adjust your ITC accordingly, and maintain compliance with GST regulations.

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