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GST: How to handle RMA return in case of export under rebate (Doc ID 2588239.1)

Last updated on DECEMBER 08, 2020

Applies to:

Oracle Financials for India - Version 12.1.1 and later
Information in this document applies to any platform.


Reported Scenario
How to handle the case of return / RMA in case of export order under rebate where for the actual item physical movement of goods didn't happen ?

This case is specific to the below scenario.

Let us consider an export sales order which should be returned post ship confirm .Upon return of the material as there is no physical movement of goods outside India, an AR credit memo will be created.
Find that on accounting the taxes are not getting reversed. ( taxes which are applied on the sales order and where the accounting got generated at the point of shipment)

This is not applicable for all scenarios but as explained for the case where the product / goods / perishable item stands damaged after executing ship confirmation and hence the stale material cannot be shipped overseas.

How to replicate this issue

1. Order is created with IGST Taxes ( exports under rebate).
2. On ship confirmation , GST taxes accounted as 
      Credit IGST liability
      Debit  IGST Expense account.
3.  AR invoice is raised.
4.  Create an  RMA 
5.  Create an  RMA receipt
6.  AR credit memo gets generated.
     Upon accounting AR Credit memo, there is no reversal entry of shipment.

During the ship confirmation of the goods with export under rebate the accounting entries generated for GST taxes are 

                                         Credit                     Debit 
Upon Ship Confirmation    IGST Liability              --
                                                                     IGST Expense Account  

Since the material is damaged, on performing an RMA,take receipt for the material to move back into their warehouse and an AR Credit memo gets generated.
Once the AR credit memo gets generated the shipment accounting entries are expected to be reversed.




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