purchase return and sales return

• Return by registered and unregistered person shall be deal in the folllowing manner:

• By Registered Taxable Person

Duty paid goods returned by a registered taxpayer will be treated as ‘Deemed Supply’ and tax has to be paid on this by the person returning the goods. This is because the goods were sold before GST, allowing the buyer to claim input tax credit on the tax paid while discharging output tax liability, or to carry forward the input tax credit under GST. The seller, however, will not have been allowed input tax credits in the old regime.

When such goods are returned, GST will be discharged by the person returning the goods. The tax paid will be allowed as input tax credit to the original seller of such goods thus eliminating loss.

• By Unregistered Taxable Person

The seller of such goods will be allowed refund of tax paid at the time of original sale if the following conditions are satisfied:

1. the goods were removed/sold within 6 months prior to the appointed day
2. said goods were returned within 6 months from the appointed day