Managing Purchase Returns of Goods under Reverse Charge Mechanism (RCM) in TallyPrime is essential for accurate GST reporting and compliance.
If your business makes purchases where you, the recipient, are liable to pay GST under RCM, then handling returns of such purchases requires proper accounting treatment.
Let’s walk through this in a simple, clear way with examples.
1. What is Reverse Charge Mechanism?
In normal cases, the supplier pays GST to the government.
But under RCM, the buyer (recipient of goods or services) pays the tax.
Common examples include:
- Purchases from unregistered dealers
- Certain notified goods or services (like transport services)
2. Scenario: Reverse Charge Purchase Return in TallyPrime
Suppose your business:
- Purchased raw materials worth ₹10,000 from a transporter
- The transporter is an unregistered dealer
- You paid GST of 18% (i.e., ₹1,800) under reverse charge
- Now you are returning those goods
You will need to reverse the original transaction and adjust the GST liability accordingly.
3. Step-by-Step Guide to Manage Purchase Returns Under RCM in TallyPrime
1. Enable Reverse Charge in TallyPrime
Go to:
F11 (Features) → Statutory & Taxation → Enable Goods and Services Tax (GST): Yes
Also enable:
Enable Reverse Charge Mechanism: Yes
2. Create a Purchase Voucher for Original Transaction
Use a Purchase Voucher with GST set to Reverse Charge.
- Date: 01-Apr-2025
- Party Name: Transporter (Unregistered)
- Purchase Ledger: “Purchase – RCM” (linked to GST with Reverse Charge applicability)
- Amount: ₹10,000
- Tax: 18% (automatically calculated)
- Set GST Rate under RCM configuration
Tally will show tax liability under RCM which you’ll need to pay.
3. Record the Purchase Return
Use a Debit Note to return the goods and reverse the entry.
Go to:
Gateway of Tally → Vouchers → F9: Debit Note
Enter:
- Date of return
- Select the same party (Transporter)
- Select the same purchase ledger
- Enter the same amount (₹10,000)
- Under GST details, select Reverse Charge Applicable
Tally will reverse the tax effect of the purchase and reflect it in GST reports.
4. Important Points to Remember for Purchase Returns of Goods Under RCM in TallyPrime
- Always use Reverse Charge enabled ledgers for both purchase and return.
- In the return voucher (Debit Note), ensure Reverse Charge is marked as applicable.
- GST liability from the original purchase will be reversed in your GSTR-3B under RCM sections.
- You should also see this reflected in the GSTR-2A and GSTR-3B reconciliation.
5. Example Summary for Purchase Returns of Goods Under RCM in TallyPrime
| Particulars | Amount (₹) |
|---|---|
| Purchase under RCM | 10,000 |
| GST @18% under RCM | 1,800 |
| Purchase Return | -10,000 |
| GST Reversed on Return | -1,800 |
Your net liability becomes zero after recording the return.
6. Conclusion
Managing purchase returns under reverse charge in TallyPrime is simple when you:
- Use proper ledgers
- Tag GST and RCM settings correctly
- Record debit notes for returns
This ensures your tax liability is accurate and you avoid any compliance issues.
Always double-check your GST reports (GSTR-3B and GSTR-1) after such transactions to ensure everything aligns.
Let me know if you’d like a downloadable step-by-step guide or example voucher screenshots.
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