PURCHASE RETURN AND INPUT IMPACT

This query is : Resolved

jaigurudev (Querist)
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03 August 2024 Dear sir,
i return[purchase return] some goods to party with sales invoice in 2022-2023 but after 4 month party issued credit note for that invoice in 2023-2024 which impact my input showing less
please advice me what to do?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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13 August 2025 You're dealing with a purchase return situation where the credit note was issued in the next financial year, which has impacted your GST Input Tax Credit (ITC).
Let’s break this down and address it clearly:

🧾 Your Case (Summarized):
Year of Purchase: FY 2022–23
You returned the goods (issued a sales invoice back to supplier) in FY 2022–23
Supplier issued Credit Note in FY 2023–24 (after 4 months delay)
Due to this, your ITC appears reduced or mismatched
Likely GST portal (GSTR-2A/2B) not showing proper credit alignment
🎯 What’s the Issue?
Under Section 16(4) of CGST Act, ITC must be availed by the earlier of:
30th November of the following financial year, or
The date of filing of annual return (GSTR-9)
In your case:
You returned goods in FY 2022–23
Supplier delayed issuing the credit note until FY 2023–24
As a result, the reversal of ITC may now be reflected in FY 2023–24, causing:
Reduced available ITC in FY 2023–24
Mismatch between books and GSTR-2B
✅ What You Should Do:
1. Account for the Credit Note in FY 2023–24
Even though the return was in FY 2022–23, legally, the supplier issued the credit note in FY 2023–24
Hence, you are required to reverse ITC in FY 2023–24 (the year the credit note is issued)
📌 This will cause an ITC reversal in your GSTR-3B in the month the credit note reflects in GSTR-2B
2. No Need to Revise FY 2022–23 Return
GST returns are not revisable
Since supplier delayed the credit note, you cannot adjust FY 2022–23 data now
It’s acceptable (though not ideal) to reflect ITC reversal in FY 2023–24 — as per actual credit note date
3. Document the Reason Properly
Maintain proper documentation for your records:
Copy of original purchase invoice
Sales invoice issued for return
Credit note from supplier
Reconciliation sheet showing mismatch reason
This helps during assessments or GST audits to explain the delayed credit note.
🧮 Accounting Entry (FY 2023–24)
When credit note is received:
Input CGST A/c Dr. ₹X
Input SGST A/c Dr. ₹X
To Supplier A/c ₹Total
Or if already booked, simply:
Supplier A/c Dr. ₹Total
To Input CGST A/c ₹X
To Input SGST A/c ₹X
Then reverse it in GSTR-3B (under “ITC Reversal” section).
✅ Final Advice
Issue Action
Credit note issued in FY 2023–24 Reverse ITC in FY 2023–24
Mismatch in 2A/2B vs books Keep reconciliation + documentation
Supplier delay Cannot fix past period return, only adjust going forward
Annual Return impact Report in GSTR-9 with reconciliation note

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