What is a credit note, when is it issued, how to file taxes, and how to record an account❓

What is a credit note, when is it issued and how do I file taxes?

📌 What is a credit note?

Credit note is a general document used in the purchase of goods. or provide service A credit note is generated when a tax invoice is issued to the customer. and subsequent problems such as delivery of defective products, breakage, products that are not in accordance with the agreement which causes the buyer to want to return the product to the seller The seller has a duty to reduce the debt to the buyer. The document that is issued is called a credit note.

📌 Important things that must be in the credit note

1. The term “debit note”

2.Name, address and taxpayer identification number of the VAT registrant that issued the credit note

3. Name and address of the purchaser or service recipient

4. Date, month, year of issuing credit note

5. Book number/number of the original tax invoice (if any) value of goods or services shown in the original tax invoice correct value The difference between the two values and the amount of tax to be refunded for the difference

6. Brief description about the reason for issuing a credit note

7. Other texts prescribed by the Director-General

📌 Reasons for issuing a credit note

issuing credit notes reduce sales tax But it doesn't mean that you can suddenly issue a credit note. The issuance of a credit note approved by the Revenue Department must be due to the following reasons:

(a) there is a reduction in the price of the goods sold due to

- Products that violate the agreed terms

- The product is damaged or lacking in quantity

- Miscalculated the price of a product higher than it actually is?

- due to other reasons as prescribed by the Director-General of the Revenue Department

(b) there is a price reduction in service due to

- Providing services that violate the agreed terms

- Lack of service

- miscalculating the price of the service fee higher than it actually is; or

- due to other reasons as prescribed by the Director-General of the Revenue Department

- Defective product

- does not match the example

- does not match the description, or

- due to other reasons as prescribed by the Director-General of the Revenue Department

(d) A VAT registrant has a duty to pay compensation or other similar money to a purchaser of goods or a receiver of services in accordance with its obligations under the law.

(e) the VAT registrant has paid back advance payments, security deposits, deposits, reservations or other similarly charged payments to purchasers of goods or service recipients under trade agreements;

(f) Goods are returned or exchanged according to the trade agreement between the VAT registrants together.

(g) Goods are returned or exchanged according to the trade agreement between the VAT registrant and the purchaser, only within a reasonable time.

(h) Termination of the service contract due to

- the service is impaired or

- Providing services that violate the agreed terms

(i) Termination of the service contract due to lack of service under the contract.

📌 Correct credit note according to the Revenue Department

The Revenue Department has specified the details that must be included in the credit memo. The credit note must contain the following items:

- The word "debit note" in a prominent place

- Name, address and taxpayer identification number of the VAT registrant that issued the credit note and in the case where an agent issues a credit note on behalf of a VAT registrant, the name, address and taxpayer identification number of that agent shall also be specified.

- Name and address of the purchaser or service recipient

- date, month, year of issuing credit note

- the serial number of the original tax invoice, including the serial number of the book (if any), the value of the goods or services shown on the tax invoice, the correct value of the goods or services; The difference between the two values and the amount of tax reimbursed for the difference

- A brief description of the reason for issuing a credit note

When does the credit note have to be issued? How do I file taxes?

The seller's side must issue a credit note. and to submit tax returns within the following periods:

- The seller must issue a credit note and use the VAT amount in the credit note to deduct the sales tax amount. In the month of the incident that caused the issuance of a credit note

- but if there is a necessity, the credit note cannot be issued in that month to issue a credit note and reduce sales tax in the month following the month in which the event occurred

- Able to issue 1 credit note with reference to more than one original tax invoice

On the buyer's side, a credit note must be issued. and to submit tax returns within the following periods:

- Buyer must use internal credit memo "Received month" only, cannot be used across the month.

- In other words, the buyer must deduct the VAT amount on the credit note from his or her input tax. "Received month" credit note only

How many months can the credit note be valid? Can the credit note be used across the month?

Buyers can use a credit note to reduce input tax only within the month of receipt of the credit note. The credit note cannot be used across the month.

be careful! It is not the same as the purchase tax from a regular tax invoice. that can be used for no more than 6 months from the month specified in the tax invoice

How is the credit note recorded?

On the seller's side, record the credit memo as follows:

Accounts Payable

Dr. Accounts Receivable

Cr.Income

Cr. Sales tax not yet due

Accounting for debt reduction

Dr. Income

Dr. Sales tax is not due yet.

Cr. Trade accounts receivable

On the buyer's side, record the credit memo as follows:

Accounts Payable

Dr. purchases or inventories/expenses

Dr. The input tax is not yet due.

Cr. Accounts Payable

Accounting for debt reduction

Dr. Accounts Payable

Cr. purchase or inventories / expenses

Cr. The input tax is not yet due.

Lost credit note...what should I do?

Issuing a substitute for a credit note if the credit note is lost, destroyed or substantially damaged. The buyer can request the seller to issue a replacement for the credit note.

The seller can issue a substitute for the credit note by copying the credit note. and record the list as follows into the photo or on the back of the photo. and the back of a copy of the credit note save the list

- A substitute issued for the time

- day, month, year of issuing the replacement certificate

- Brief explanation, reason for issuing a replacement certificate

- Sign the name of the person who issued the certificate instead.

And the seller must record the issuance of substitutes in the sales tax report. in the month in which the replacement certificate is issued by specifying the name of the buyer No./Book No. The date of the credit note that the substitute was issued.