Instructions on how to declare invoices and account for returned goods

Check out this article to understand how to account for returned goods, how to declare taxes & issue invoices for returned goods… for suppliers & buyers.

I. Documents and certificates for returning goods

According to the provisions of Point 2.8, Appendix 4, Circular 39/2014/TT-BTC, instructions on cases where the buyer returns the goods are as follows: 

1. The buyer returning the item is an individual

The buyer is an individual or organization that does not have the function of issuing invoices. The two parties prepare a profile including: 

➤ In case of returning all goods:

When returning goods, the seller and the individual returning the goods must:

• Make a record clearly stating the following criteria: type of goods, quantity, value of returned goods at price excluding tax, VAT amount according to the established sales invoice (including invoice number, date, month);
• State the reason for returning the goods and compensation arrangements (if any);
• Recall the invoice or make a record of retrieving the invoice.

➤ In case of returning a part of the goods:

Process the same as if all goods were returned, then issue a new invoice for the goods not returned by the buyer.

2. Buyer returns goods as a business

• The two parties make a record of return of goods similar to the above case;
• The buyer issues an invoice for the return of the goods (in full or in part depending on the quantity of goods returned). 

Note : Clearly state on the invoice the reason for returning the goods.

Example 1: On December 15, 2021, Nhat Long Company purchased 10 Canon LPB2900 printers, unit price: 5,000,000 VND from Gia Huy Company, the two parties delivered the goods and issued invoices. However, on December 18, 2021, Nhat Long Company discovered that the goods were defective, so it requested to return them and Gia Huy Company agreed. When returning the goods, Nhat Long Company issued an invoice and clearly stated the reason for the return.

 See more: Register to use electronic invoices.

II. Instructions on how to declare invoices and account for returned goods

1. Regulations on declaration period of returned sales invoices

Return invoices are declared in the period in which they were issued, and do not make additional declarations in the period in which the sale was made;

For example: Invoice returned on April 15, 2021, then declare in April (if declaring monthly) and declare in the second quarter (if declaring quarterly).

In case the sales invoice and purchase invoice arise in the same declaration period and the buyer returns all goods with the same value as the issued invoice, the unit does not need to declare for the 2 invoices (sales invoice and return invoice) because the 2 invoices have been offset against each other.

2. Instructions on how to declare and account for taxes for sellers

2.1. How to declare tax for the seller

Invoices for return of goods must be declared in the period in which they are issued;

Based on the tax rate of returned goods, declare accordingly in the indicators on the 01/GTGT ​​declaration, then take the revenue and tax rate on that indicator and subtract the revenue and tax rate of returned goods:

• Tax free: index 26;
• Tax rate 0%: target 29;
• Tax rate 5%: indicators 30, 31;
• Tax rate 10%: index 32, 33;
• Excluding tax: item 32a.

Example 2: On November 15, 2021, Gia Huy company sold 10 printers, total value: 50,000,000 VND, VAT 5,000,000 VND to Nhat Long company, Nhat Huy company issued an invoice and declared in the November declaration period.

On December 18, 2021, the buyer discovered that the goods were defective, and both parties agreed to return the entire order. The buyer issued invoice number 0000002, with a value of VND 50,000,000 and a VAT of VND 5,000,000.

➥ Upon receiving invoice 0000002, Gia Huy company made a declaration in the January declaration period. The unit recorded on the December sales statement kept at the company: reduced revenue on target [32] by 50,000,000 VND and VAT on target [33] by 5,000,000 VND.

2.2. Tax accounting for the seller

• For accounting cases according to Circular 200/2014/TT/-BTC:

Debit account 5212: value of returned goods;

Debit 3331: VAT on returned goods;

Credit account 131/111/112: amount of returned goods.

>> End of period transfer:

Debit account 511: value of returned goods;

Credit account 5212: value of returned goods.

• For accounting cases according to Circular 133/2016/TT-BTC:

Debit account 511: value of returned goods;

Debit 3331: VAT on returned goods;

Credit account 131/111/112: amount of returned goods.

Note :

In case the seller has recorded the cost price, when receiving the returned goods, the company accounts as follows:

Debit 156: cost of returned goods sold;

Credit account 632: cost of returned goods sold.

3. Instructions on how to declare and account for taxes for buyers

3.1. How to declare tax for the buyer

➤ Take the value and tax rate of purchased goods during the period and subtract the value and tax rate of returned goods:

• Indicator 23 = Value of goods purchased during the period – Value of returned goods; 
• Indicator 24 = VAT on goods purchased during the period – VAT on returned goods;
• Indicator 25 = Deductible VAT on purchased goods in the period – VAT on returned goods.

Example 3: Same as example 2. On December 18, 2021, when issuing return invoice number 0000002, value 50,000,000 VND with VAT 5,000,000 VND, the buyer makes a recording on the purchase statement in December ➥ On declaration 01/GTGT, reduce index [23] by 50,000,000 VND, reduce index [24], [25] by 5,000,000 VND.

3.2. Tax accounting for the buyer

When returning goods, the buyer accounts as follows:

Debit account 331/111/112: total value of returned goods;

Credit account 156/152/211…: value of returned goods;

Credit account 133: VAT of returned goods.

 See more: How to handle incorrectly written electronic invoices.

III. Frequently asked questions when declaring invoices and accounting for returned goods