- Pursuant to current regulations and guidance of tax authorities:
In case the seller has issued an invoice, the buyer has received the goods, the seller and the buyer have made VAT declarations as prescribed. After that, the seller and the buyer discover that the delivered goods are not in accordance with the specifications and quality and must return part or all of the goods, adjust the value of the sold goods, they must then issue an invoice for the return of the goods or issue an adjusted invoice according to regulations. Based on the goods return invoice or the adjusted invoice, the seller shall declare the adjustment of the sales volume and output VAT, the buyer shall adjust the purchase volume and input VAT in the tax period for which the return invoice is generated or the adjusted invoice is generated.
- Regarding accounting, reference information is as follows:
– When the seller receives the invoice to return the goods:
Debit 5212: Value of returned goods
Debit 3331: VAT of returned goods
Credit 131/1111/112: Settlement / return to the buyer
– Buyer accounts for returned goods:
Debit 331/1111/112: Settlement / recovered from the seller
Credit 156: Value of returned goods
Credit 133: VAT of returned goods