With the handling of businesses’ day-to-day transactions, the companies face many types of difficulties every day. Like sometimes, they face the problem of less stock of raw materials or their manufacturing purposes. And they may lack inventory of finished goods to fulfill the sales orders. Also, there may be the case of products for which Purchase Orders got sent to suppliers with specific details not matching the goods delivered. So to avoid these problems, the companies rely on automation software that can help them in these situations. With the help of the solution, they can get an alert just before they are low on stocks of raw material and Finished goods. Further, it can help them prepare a Purchase Return document for returning the faulty goods. Also, it can help them show the proof document (Purchase Order) as giving the details of products they ordered.
And the problem of returning goods happens a lot of times in many businesses because most companies are still not digitized. Because of that, these businesses are facing difficulties of faulty or wrong procurements. As the organizations are working manually, matching of exact details of Purchase Orders and Tax Invoices is not happening effectively.
It is one of the reasons why businesses need the Purchase Return document for them. So let’s understand how the Purchase Return helps businesses and what does it means.
What is a Purchase Return?
When a buyer or customer sends back a product to its seller or supplier, the event is known as Purchase Return. And the reason for the Purchase Return to take place maybe because of wrong goods supply took place by supplier. Or the quantity was excess, or the quality was different. Further, it can be the price of the product was different than asked for (including tax rates and amounts).
Because in today’s date, almost all businesses follow a double-entry system and periodic inventory system, in some cases, the need for a Purchase Returns document is there. Additionally, this helps them in their accounting entry process and now, in GST Law requirements.
How should businesses act for Purchase Returns under GST Law?
Before GST Law implementation, there were many other forms of Indirect Tax Laws like VAT, CST, Excise duty, etc., and the businesses were following them. So they have to work as per the new set of rules. Accordingly, for both the cash and credit transactions, the buyer initially acquired an excessive quantity of goods, or for some other reason the Purchase Return is happening, they have to prepare documents as per the GST rules and show them in their respective GST Returns.
According to the new GST Rules, the recipients or customers initiate the Purchase Return process. And for that, they use the Credit Note document. Further, these credit notes get a mention in the GST returns. As to set off the tax liabilities on cash and credit purchases.
So now we think the concept of Purchase Return is clear, and you know how to use it according to GST. Additionally, SMEs can now grasp the benefits of Purchase Return. As to how the Purchase Returns document helps to send back the damaged or faulty goods to the supplier without any difficulty.
Also, it can easily aid set off the balance of trade payables arising due to the return of products. And if the businesses use a software solution for preparing Purchase orders and Purchase Returns there work becomes error-free and easy.
So to help the SMEs and manufacturing concerns in their preparation of Purchase Return document (Credit Note) as per GST regulations. TranZact is a software that can help them.
TranZact is a zero-effort digital transformation tool and platform for SMEs to digitize business processes right, from customer inquiry to dispatch. This software helps businesses in all their invoicing needs and as per GST guidelines. Further, with its email feature, the companies can directly send the details of invoices to their customers. Aditionally, it helps in generating GST Reports to help companies in their return filing needs.
The TranZact team provides their digitizing tool on a Freemium policy. Because we want our customers to take a step forward in digitizing their businesses without having to think over silly amounts of money.
Further, the organizations must choose TranZact or any other software only when it meets all their requirements. They should check whether it is suitable for their business size and nature. And if the software satisfies all these conditions. Then only should implement it in their organization.