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In a normal business cycle, many times goods are returned by the recipient of such goods based on various reasons. Sometimes dealer has Returned Goods sent on approval basis and the customers are provided with an option either to retain such goods or return them within a specified time period.
Taxpayers registered under GST are curious about the transition of transactions of such nature from old laws to Goods and Service Tax laws. Transition provisions provided under Chapter XX of CGST Act, 2017 provides information and provisions relating to the treatment of various transactions under GST.
In this article, we will cover two of such topics-
Provisions relating to the transition of tax on goods returned after GST are specified in Sub-section (1) of Section 142 of the Act. As per these provisions treatment of tax/duty paid on goods returned after the implementation of GST depends on the following conditions;
If all the above-stated conditions are satisfied, then the treatment of such duty or taxes paid can be segregated into two categories, they are:
Next, we will discuss the provisions relating to goods sent on approval basis before the implementation of GST. These provisions are stated under Sub-section (12) of Section 142. This section specifies the following preconditions to be satisfied in order to be eligible to be considered under transition under GST laws:
If all the above-stated conditions are satisfied, then the treatment of such duty or taxes on such goods sent on approval basis can be segregated into two categories, they are:
After the implementation of GST, businesses are worried regarding the taxability of goods sent on approval basis before GST and returned goods after its implementation. In case you have any query regarding GST or related laws, contact Enterslice.
Read our article: Govt. Allows Taxpayers to File GSTR-3B Returns in a Staggered Manner
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