What is a debit note?

Debit notes are usually issued to rectify erroneous values recorded in

previous invoices. For example, if a product costs Rs. 450, and the invoice is
wrongly recorded as Rs. 400, then a debit note of Rs. 50 is issued by the
seller. At times, a debit note may be issued by the vendor to request a credit
note from the customer. GST tax invoices cannot be changed once they’re
uploaded on the GSTN portal, so if changes need to be made, debit notes are
issued.

When is a debit note issued?

A debit note is issued when the recipient owes the supplier. Here are some
cases:

 The tax amount shown in an invoice is less than the actual payable amount.
Example: When the total tax amount of the invoice adds up to Rs. 500, but it’s
wrongly recorded as Rs. 400.
 The taxable value of the supply mentioned in the invoice is less than the
actual amount. Example: When a product that should be under the 18% GST
tier is wrongly taxed at taxed at 12% instead.
 A registered person may issue a consolidated debit note for multiple invoices
issued in throughout a financial year.

When a debit note is issued, it’s accompanied by a supplementary invoice. A

supplementary invoice is issued when there are errors in the original tax
invoice.

Format of a debit note

Based on the rules prescribed by the Government, here is what a sample
debit note will look like in the GST regime:
 The word “Revised Invoice”, should appear wherever applicable.
 Name, address, and GSTIN of the supplier
 Nature of the document (DEBIT NOTE, in this case), unique serial number
(containing only alphabets and/or numerals), and date of issue of the debit
note.
 Name and address of the recipient. If the recipient is registered for GST,
provide their GSTIN/UIN, and if the recipient is not registered under GST,
mention their State and State code.
 Serial number and date of the corresponding tax invoice or the bill of supply
(whichever one was originally issued)
 Value of the taxable goods and services involved in the sales transaction
 Tax rate, and the amount of tax to be debited to the recipient
 Signature or digital signature of the authorized supplier

Procedure
The supplier should furnish details of a debit note while filing returns for the
month in which the debit note was issued. The tax liability will be adjusted
accordingly.

Time limit
There is no time limit to issue a debit note. However, once a debit note is
issued, the supplier should declare it to their monthly return no later than the
following month.

The debit note details should be furnished either by the September following
the financial year in which the sales transaction was carried out, or by the date
of filing of the relevant GSTR-9 annual return, whichever is earlier.
 If the seller does not adhere to the time limit, the debit note may not be
considered for adjusting tax liability.

A debit note should prominently contain the words ‘INPUT TAX CREDIT NOT
ADMISSIBLE’, if it’s issued in the following cases:
 In case of unpaid tax, short paid tax, wrong refunds, wrongly availed or
fraudulent utilization of ITC, furnishing fake details on purpose, suppression of
facts. (SECTION 74).
 Detention or seizure of goods and vehicles involved in transit. (SECTION 129)
 Confiscation of goods or vehicles involved in transit, and levy of penalty.
(SECTION 130)

Debit Note

A Debit Note is a document sent by a buyer to the Supplier notifying that a debit has
been recorded against the goods returned to the Supplier.

A Debit Note is issued for the value of the goods returned. In some cases, sellers are seen
sending Debit Notes which should be treated as like another invoice.

A Debit is for your record of the debit against the Items your return.

1. How to create Debit Note

The user can make a Debit Note against the Purchase Invoice or they can directly make
Debit Note from the Purchase Invoice without reference.

1. Go to the respective Purchase Invoice and click on Create > Return / Debit Note.

2. The Supplier and Item details will be fetched as set in the Purchase Invoice.

3. If you had paid partially or fully, make a Payment Entry against the original Purchase

Invoice.

4. Save and Submit.

 1.1 How does Debit Note affect ledger
Once a Payment Entry is created against the original Purchase Invoice, the amount will be
added to the Supplier's account in negative so that the next time you make a purchase, this
amount will be adjusted.

This is how the ledger is affected after a payment entry against a returned invoice:

1.2 No payment was made against Sales Invoice

In case no payment was made against the original invoice, you could just cancel the Sales
Invoice. But, if only 5 out of 10 Items are being returned from an invoice, creating a Debit
Note is useful for updating the ledger.

2. Example
From Supplier Blue Mills, you had purchased Cotton worth Rs 2400 + taxes and at the time
of delivery, you found that the products were damaged. Now you returned the product a
Debit Note will be issued.

Debit Note with payment entry in ERPNext for above example is as below:

What is debit note and why is it used?

A debit note is a document used by a vendor to inform the buyer of current debt obligations, or
a document created by a buyer when returning goods received on credit. The debit note can
provide information regarding an upcoming invoice, or may serve as a reminder for funds
currently due

How do you use a debit note?

Debit Note entry in tally with GST for Purchase return.
1. Go to Accounting Voucher > Ctrl+ F9 Debit note.
2. Choose the date of return of goods by pressing F2 Date.
3. Select Party ledger , From whom you bought the item.
4. Select the stock item returning to the supplier.
5. Enter the quantity , and rate of retuning goods.

Debit Note

A debit note is a document sent by a buyer to its seller, or in other words,

a purchaser to its vendor while returning goods received on credit. The
intent is to notify the seller that they’ve been debited by the buyer against
the goods returned.

It reduces the amount due to be paid to the seller, (if the amount due is Nil)
then it allows further purchases on behalf of that.

A debit note is issued for the value of the goods returned. In some cases,
sellers are seen sending debit notes which should be treated as just another
invoice.

Example – Company-A buys goods worth 1,00,000 from Company-B,

however, 10,000 worth of goods were found damaged due to some reason &
this was notified to Company-B at the time of actual delivery.

Company-A (buyer) issues a debit note for 10,000 in the name of Company-
B (seller). This reduces the obligation of the buyer by 10,000 and is now
only required to pay 90,000.

ew Characteristics of a Debit Note

1. It is sent to inform about the debit made on the account of the seller
along with the reasons mentioned in it.

2. The purchase returns book is updated on its basis. (In case of return of
goods)

3. It is usually used by the buyer to return goods on credit.

4. It is generally prepared like a regular invoice and shows a positive

amount.

Related Topic – Accounts Payable Process with Journal Entries

Journal Entry for Debit Note

In the books of buyer
Goods returned by the buyer are purchase return, the impact of returning
goods to the seller are;

1. Current liability decreases as payables against credit purchase reduce.

2. Expense decreases as credit purchases reduce.

Creditor’s A/C Debit

To Purchase Return A/C Credit

In the books of seller

Goods received (back) by the seller are sales return, the impact of
receiving goods by the seller are;

1. Revenue decreases as credit sales reduce.

2. Current assets decrease as receivables against credit sales reduce.

Sales Return A/C Debit

To Debtor’s A/C Credit

What is a Credit Note?

A credit note is also known as a credit memo, which is short for "credit memorandum."
This is a commercial document that the supplier produces for the customer to notify the
customer that a credit is being applied to the customer for various reasons.

The reasons normally include the following:

 the customer returned the goods or rejected the services for any number of reasons

 the goods were damaged in some way, usually during transit

  there was a mistake in the price on the original invoice

 the customer overpaid the original invoice

On the credit note, the supplier will list the products, quantities and product or service
prices that were agreed-upon by both parties. It will normally reference the original
invoice and state the reason for the credit note.

The credit can be provided to the customer as money, or (as usual) it can be applied to
future purchases.

You can download a free credit note template here!

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Credit Note

A credit note is a document sent by a seller to its buyer or, in other

words, a vendor to the customer, notifying that a credit has been provided
to their account against the goods returned by the buyer.

It reduces the amount due to be paid by the customer, (if the amount due is
Nil) then it allows further purchases in lieu of the credit note itself.

A credit note is issued for the value of goods returned by the

customer, it may be less than or equal to total amount of the order.

Example – Company-B sells goods worth 1,00,000 to Company-A, however,

10,000 worth of goods were found damaged due to some reason & this is
notified to Company-B at the time of actual delivery.
Company-B (seller) issues a credit note for 10,000 in the name of Company-
A (buyer). This reduces the receivables of the seller by 10,000 and the buyer
is only required to pay 90,000.

Important Characteristics

1. It is sent to inform about the credit made in the account of the buyer
along with the reasons.

2. The sales return book is updated on its basis. (In case of return of
goods)

3. It is usually sent by the seller if the goods are found incomplete, damaged
or incorrect at buyer’s end.

4. It shows a negative amount.

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Features[edit]
A credit note lists the products, quantities and agreed prices for products or services the seller
provided the buyer, but the buyer returned or did not receive. It may be issued in the case of
damaged goods, errors or allowances. In respect of the previously issued invoice, a Credit Memo
will reduce or eliminate the amount the buyer has to pay. Note: A Credit Memo is not to be
substituted as a formal document. The Credit Memo rarely contains: PO #, Date, Billing Address,
 Shipping Address, Terms of Payment, List of products with quantities and prices. Usually it
references the original Invoice and sometimes states the reason for issue.

Uses[edit]

 To allow the buyer to purchase an item or service from that seller on a future date, i.e. a gift
card or store card credit. Credit notes may be issued by a seller as a goodwill gesture to a buyer
who wishes to return previously purchased merchandise (instead of cash repayment) in
circumstances where the original sales agreement did not include an explicit refund policy for
returned items. In such circumstances, a credit note of value equal to the price of the returned
item is usually issued allowing the buyer to exchange his purchase for other items available with
the sale.

Credit note accounting: how does it work and what needs to be

considered?
Issuing credit notes saves both buyers and sellers time and hassle, which is why it’s a popular form
of billing. But how do you post a credit note? In accounting, the credit note must also appear on the
balance sheet. What does the booking entry look like?

Contents
1. Credit note entries simply explained
2. Making a credit note entry in the account

Credit note entries simply explained

In another article, we explained what a credit note is. A credit note is also known as a credit memo,
which is short for “credit memorandum.” It’s a document sent by a seller to the buyer, notifying them
that a credit has been added to the customer’s account for goods returned. In this article, we
will explain how to post credit notes correctly.

The buyer
returns the goods and the seller sends a credit note.
Making a credit note entry in the account

Credit notes are a little bit different to standard profit and loss posts, and therefore need to be
entered differently. It also depends on whether you’re the buyer or the seller.

In the buyer’s account

Any goods returned by the buyer are regarded as purchase returns, which decreases the liability to
pay the respective creditor and decreases the expense previously incurred to purchase said goods.

Creditor’s account Debit

To purchase return account Credit

If the buyer has not yet paid the seller, the credit note can be used to reduce the total liability. If
the buyer has already paid the whole amount of the invoice, the buyer can decide whether they
should use the credit note to offset any future payments to the seller, or as they can use it to
demand a cash payment in exchange for the credit note.

The buyer’s accounts during the credit note procedure.

In the seller’s books

Goods returned to the seller are known as sales returns. By returning these goods to the seller, it
results in a decrease in revenue previously booked as sales as well as a decrease in assets, since
the debtor won’t be making the payment anymore.

Sales return account Debit

To debtor’s account Credit

The seller should always review any open credit notes they have at the end of each reporting period
to see if they can be linked to open accounts receivable. This reduces the aggregate dollar
amount of invoices outstanding, and can be used to reduce payments to suppliers.

Accounting and Journal Entry for Credit Card

Sales

Journal Entry for Credit Card Sales

Digitization and modernization have made credit cards a very common mode of
payment. Credit cards allow customers to shop without cash and make swift hassle-free
payments. Frequent credit card payments mean businesses have to deal with the
aspect of accounting and posting journal entry for credit card sales.

There are majorly four credit card issuers in the world Visa, Master, Discover &
American Express. For accounting and journal entry for credit card sales there are 2
scenarios;

Scenario 1 – When cash is received at a later date.

Scenario 2 – When cash is received immediately.

1. Journal Entry for Credit Card Sales when

Cash is Received at a Later Date
In case if the company’s bank account is not linked to the payer bank (issuer of swipe
machine) then the business receives cash at a later date. The seller needs to submit all
receipts of credit card sales as prescribed by the payer bank. Money is credited to
company’s account after deducting the commission on credit card sale.

 Journal entry when amount is due

When the amount is due it is shown as accounts receivable in the books of the
business.
  Journal entry when dues are settled at a later date

Following journal entry is posted in the ledger accounts when the amount is settled
and the company’s bank account is credited with the net amount; i.e. after adjusting
commission.

Example

Unreal Corp. has 5,00,000 as credit card sales on 10th of January which is due to be
settled on 30th of January. Commission rate charged by the issuer bank is 2% on total
sales.

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Journal entry on the date of transaction (10th January)

(Accounts Receivable account is used to show amount due)

Journal entry on the date of settlement (30th January)

2. Journal Entry for Credit Card Transactions
when Cash is Received Immediately
Nowadays payer banks issuing credit card machines (also known as Point of Sale
terminals) automate the entire process which means that the cash is credited
automatically to the firm’s current account and no manual settlement is required. In
this case, it is treated as an ordinary cash sale.

Example – When cash is received immediately

Unreal Corp. has a total of 5,00,000 as credit card sales on 10th January which is
directly credited to the company’s account. Commission rate charged by the issuer
bank is 2% on total sales.

PROPRIETOR
For workers as "cell proprietors" were to be afforded crucial domains of discretion, albeit ones
traversed by tensions and potential conflicts.
From Cambridge English Corpus

Thus, the landed proprietors exercised a good amount of autonomy and authority in the
economic sphere.

From Cambridge English Corpus

These examples are from the Cambridge English Corpus and from sources on the web. Any
opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of
Cambridge University Press or its licensors.

proprietor
noun
pro·pri·e·tor | \ prə-ˈprī-ə-tər \

Definition of proprietor
1: one granted ownership of a colony (such as one of the original American
colonies) and full prerogatives of establishing a government and distributing
land
2a: a person who has the legal right or exclusive title to
something : OWNER
b: one having an interest (such as control or present use) less than absolute
and exclusive right

SynonymsExample SentencesLearn More

about proprietor
Synonyms for proprietor
Synonyms

holder, owner, possessor

Visit the Thesaurus for More

Examples of proprietor in a Sentence

She is the proprietor of the store. the proprietor of a used-car dealership

Recent Examples on the Web

Testarossa proprietors Rob and Diana Jensen welcomed the group to the
traditional Blessing of the Harvest at the Novitiate Winery in downtown Los
Gatos.— Laura Ness, The Mercury News, "131st annual Blessing of the Grapes marks beginning of
harvest," 10 Sep. 2019Belinda previously called herself proprietor and manager.—
Michael Mayo, sun-sentinel.com, "A barbecue revival at new Tom’s Place: ‘To honor my parents and
keep their legacy alive’," 9 Sep. 2019

These example sentences are selected automatically from various online news sources to reflect
current usage of the word 'proprietor.' Views expressed in the examples do not represent the opinion
of Merriam-Webster or its editors. Send us feedback.

proprietor noun

the owner of a business establishment, a hotel, etc.

a person who has the exclusive right or title to something; an owner, as of real
property.

a group of proprietors; proprietary.

RELATED WORDS

owner, holder, possessor, proprietary, freeholder, titleholder

NEARBY WORDS

proprietary, proprietary colony, proprietary hospital, proprietary medicine, proprietary

name, proprietor, proprietress, proprietrix, propriety, proprio motu, proprio-

ORIGIN OF PROPRIETOR

First recorded in 1630–40; propriet(ary) + -or2

RELATED FORMS

pro·pri·e·to·ri·al [pruh-prahy-i-tawr-ee-uh l, -tohr-

] , adjectivepro·pri·e·to·ri·al·ly, adverbpro·pri·e·tor·ship, nounnon·pro·pri·e·tor, n
oun

DICTIONARY.COM UNABRIDGED BASED ON THE RANDOM HOUSE

UNABRIDGED DICTIONARY, © RANDOM HOUSE, INC. 2019
 EXAMPLES FROM THE WEB FOR PROPRIETOR

 He was the proprietor of a grimy chicken joint in Rochester, New York.

THE LOSER WHO WANTED TO BE THE ISIS AGENT NEXT DOOR|MICHAEL

DALY|SEPTEMBER 18, 2014|DAILY BEAST

 Seyed, the proprietor, tells us that there is always a way to keep the police quiet.

TEHRAN’S UNDERGROUND SPEAKEASIES|IRANWIRE|JUNE 15, 2014|DAILY BEAST

 Once I was pregnant, I embraced my own femininity and settled into my role as
decision maker and proprietor.

YES, WOMEN CAN MAKE GREAT WINE|JORDAN SALCITO|MARCH 22, 2014|DAILY

BEAST

 In the spring of 2012, Don Sammons, the sole resident and proprietor of Buford,
decided it was time to sell the 147-year-old town.

AMERICA’S TINIEST TOWN IS SOLD AND RENAMED PHINDELI TOWN BUFORD,

WYOMING|NINA STROCHLIC

TRANSACTION

1. General: Agreement, contract, exchange, understanding, or transfer of cash or property that

occurs between two or more parties and establishes a legal obligation. Also called booking or
reservation.
2. Accounting: Event that effects a change in the asset, liability, or net worth account. Transactions
are recorded first in journal and then posted to a ledger.
3. Banking: Activity affecting a bank account and performed by the account holder or at his or her
request.
4. Commerce: Exchange of goods or services between a buyer and a seller. Every transaction has
three components: (1) transfer of good/service and money, (2) transfer of title which may or may not
be accompanied by a transfer of possession, and (3) transfer of exchange rights.
5. Computing: Event or process (such as an input message) initiated or invoked by a user or
computer program, regarded as a single unit of work and requiring a record to be generated for
processing in a database.
What is a Transaction?
A transaction is an agreement between a buyer and a seller to exchange goods, services or
financial instruments.

In accounting, the events that affect the finances of a business must be recorded on the books,
and an accounting transaction will be recorded differently if the company uses accrual
accounting rather than cash accounting. Accrual accounting records transactions when revenues
or expenses are realized or incurred, while cash accounting records transactions when the
business actually spends or receives money.

Understanding Transactions
Transactions in terms of sales between buyers and sellers are relatively straightforward. Person A
gives person B a certain amount of money for a good, service, or financial product.

Transactions can become more complex in the accounting world since businesses may
sometimes make deals today which won't be settled until a future date, or they may have
revenues or expenses that are known but not yet due. Third-party transactions can also occur.
Whether a business records income and expense transactions using the accrual method of
accounting or the cash method of accounting affects the company’s financial and tax reporting.

KEY TAKEAWAYS

 Transactions are handled differently under different accounting systems.

 Accrual accounting recognizes a transaction upon delivery or invoice.
 Cash accounting records transactions when the payment is made or received.
Recording Transactions With Accrual Accounting
In accrual accounting, a company records income when completing a service or when shipping
and delivering goods. If inventory is required when accounting for a company’s income, and the
company typically has gross receipts over $1 million annually, the company normally uses the
accrual method of accounting for sales and purchases.

Accrual accounting focuses on when income is earned and expenses are incurred. All
transactions are recorded regardless of when cash is exchanged. For example, a company selling
merchandise to a customer on store credit in October records the transaction immediately as an
item in accounts receivable (AR) until receiving payment. Even if the customer does not make a
cash payment on the merchandise until December, the transaction is recorded as income for
October.

The same concept applies to goods or services the company buys on credit. Business expenses
are recorded when receiving the products or services. For example, supplies purchased on credit
in April are recorded as expenses for April, even if the business does not make a cash payment
on the supplies until May.

Recording Transactions With Cash Accounting

Most small businesses, especially sole proprietorships and partnerships, use the cash accounting
method. Income is recorded when cash, checks, or credit card payments are received from
customers. For example, a business sells $10,000 of widgets to a customer in March. The
customer pays the invoice in April. The company recognizes the sale when the cash is received
in April. Likewise, expenses are recorded when vendors and employees are paid. For example, a
business purchases $500 of office supplies in May and pays for them in June. The business
recognizes the purchase when it pays the bill in June.

The cash basis of accounting is available only if a company has less than $1 million in sales
annually. Because no complex accounting transactions, such as accruals and deferrals, are
necessary, the cash basis is easier than the accrual basis for recording transactions. However, the
typically random timing of cash receipts and expenditures means reported results may vary
between unusually high and low profits from month to month.

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Related Terms
Accrued Expense Definition

An accrued expense is recognized on the books before it has been billed or

paid.

more

What Is Accrual Accounting and Who Uses It?

Accrual accounting is an accounting method that measures the performance of a

company by recognizing economic events regardless of when the cash
transaction occurs.

more

Trade Credit

Trade credit is a type of commercial financing in which a customer is allowed to

purchase goods or services and pay the supplier at a later scheduled date.

more

Accounting Method

Accounting method refers to the rules a company follows in reporting revenues

and expenses in accrual accounting and cash accounting.
more

Cash Accounting

Cash accounting is a bookkeeping method in which revenues and expenses are

recorded when received and paid, respectively, not when incurred.

more

Cash Basis

Cash basis is a major accounting method by which revenues and expenses are
only acknowledged when the payment occurs. Cash basis accounting is less
accurate than accrual accounting in the short term.

more

insolvent
(especially of a company) not having
enough money to pay debts, buy goods, etc.
(Definition of insolvent from the Cambridge Advanced Learner's Dictionary & Thesaurus © Cambridge University
Press)

insolvent
(esp. of a company) unable to pay what you owe because you do not
have enough money:
When it discovered the loans could not be repaid, the bank became insolvent.

(Definition of insolvent from the Cambridge Academic Content Dictionary © Cambridge University

Press)

insolvent
not having enough money to pay debts, buy goods, etc.:
be/become/be declared insolvent This May the firm was declared insolvent
and its operations were shut down.

Currently, companies must be insolvent in order to go into administration.

The bank was technically insolvent - it listed assets of $16.5 million and
liabilities of

insolvent
Indeed, much of the evidence for the mechanization of wheat farms was obtained from the
inventories of insolvent estates.

From Cambridge English Corpus

Declaring insolvency power: whether supervisory authorities have the power to declare a deeply
troubled bank insolvent.

From Cambridge English Corpus

These examples are from the Cambridge English Corpus and from sources on the web. Any
opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of
Cambridge University Press or its licensors.

Solvent Definition
A solvent is a molecule that has the ability to dissolve other molecules, known as
solutes. A solvent can be solid, liquid or gas. The molecules of the solvent work
to put the solute molecules apart. Eventually, the molecules of solute become
evenly distributed in throughout the solvent. This homogenous mixture is
perfectly even, and cannot be separated physically. Heat or another chemical
process must be applied to the solution to separate the solvent and solute.

Types of Solvents
Molecules in general have two classes, polar and nonpolar. Polar molecules have
separated electrical charges on different sides of the molecule. Nonpolar
molecules, while they can fluctuate in charge, do not carry a static charge. Both
types of molecules can act as solvents, as described below.

Polar Solvent

Polar solvents work through the actions of the positive and negative ends of
each atom interacting with each other, and the solute. A polar solvent dissolves a
solute by the electrical charges pulling on different parts of the solute molecules.
Polar solvents can dissolve ionic compounds, like salt, by pulling on the
oppositely charged molecules. The negative side of solvent molecules pull on the
positive ions in the compound. The positive side of other solvent molecules pull
on the negative ions. In this way the ions become evenly distributed throughout
the solvent.

Nonpolar Solvent

Nonpolar solvents work in a similar way to polar solvents. Nonpolar molecules

that act as solvents are usually spontaneous dipoles, in that they occasionally
form opposite electrical charges between bonds. These momentary electrical
dipoles cause nearby solvent molecules to also form dipoles. These fleeting
interactions can dissolve other nonpolar compounds. However, polar compounds
typically have stronger interactions between each other than with the
momentary dipoles of nonpolar molecules. This is why nonpolar and polar
solvents, like water and oil, do not mix.
Examples of Solvent
Water

Water is the most important biological solvent. All cells, regardless

of domain or species, rely on water. H2O has a very unique structure when it
comes to molecules. The large oxygen pulls the electrons closer, and thus
becomes more negative electrically. The hydrogen atoms each get a smaller
share of the shared electrons, and become more positive. This makes water a
very strong dipole molecule. These opposite electrical charges can dissolve a
large variety of substances. Water is a polar solvent, meaning it can easily
dissolve the ions and molecules created by a cell.

Some substances produced by cells are non-polar and tend to cluster together
away from water. All cells use this property of water as a solvent to create
membranes out of lipids. Phospholipids are large molecules that have a
polar head and a nonpolar tail. When two sheets of phospholipids are placed
together, the nonpolar tails are attracted to each other and the polar heads are
attracted to the water. This creates a water barrier between the two reservoirs.
Water acts as a solvent on the molecules inside and outside of the cell, but the
cell can use special proteins to transfer important molecules inside and waste
molecules out. These solute molecules are quickly moved throughout the cell as
they will follow a diffusion gradient, or go from areas of high concentration to
areas of low concentration with the help of the solvent. Solvents can also
become saturated with solute, a situation leading to no more solute being
dissolved.
On a bigger scale, the entire ocean is a giant solution of different salts and
chemicals. When it rains, the rain falls on the ground, dissolving solid solutes.
These solutes are carried into the river, and flow downstream. All rivers flow
towards the ocean, and these solutes are carried into the ocean as well.
Various organism rely on these solutes as nutrients or important metabolic salts.
Oftentimes in the search for life on other planets, water is considered a key
component because it is such an important and diverse solvent.

Solvents in Everyday Cooking

A common procedure in cooking, deglazing, is when the sticky and

caramelized bottom of a pan is dissolved into a solvent. Because heat is

being used, both nonpolar solvents and polar solvents work to dissolve

the sticky and burnt substance on the bottom of the pan. Nonpolar

substances, like oil can be used to create a hot solution in which other

foods can be fried. This partly infuses some of the solutes dissolved in

the solvent into the food being cooked. Chefs use this to add a kick to

fried foods. Water can also be used to deglaze a pan, which can create

a stock for soup, gravy, and a variety of other saucesIonic Compound – A

compound made of two or more charged particles.

Related Biology Terms

 Ionic Compound – A compound made of two or more charged
particles.
 Dipole – A molecule that has different electrical charges on opposite
sides of certain bonds.
  Homogenous Mixture – A mixture that cannot be physically
separated, like saltwater.
 Heterogeneous Mixture – A mixture that can be physically
separated, like sand and gravel.

Aggregate Turnover Definition and Analysis under GST


Section 2(6) of Central Goods & Services Tax Act, 2017
“aggregate turnover” means the aggregate value of all taxable supplies
(excluding the value of inward supplies on which tax is payable by a person on
reverse charge basis), exempt supplies, exports of goods or services or both and
inter-State supplies of persons having the same Permanent Account Number, to
be computed on all India basis but excludes central tax, State tax, Union territory
tax, integrated tax and cess;
Analysis
The phrase aggregate turnover is widely used under the GST laws. Aggregate turnover
is an all-encompassing term covering all the supplies effected by a person having the
same PAN. It specifically excludes:
 Inward supplies effected by a person which are liable to tax under reverse charge mechanism;
and
 Various taxes under the GST law, Compensation cess.
The different kinds of supplies covered are:
1. Taxable Supplies
2. Exempt Supplies
3. Supplies that have a NIL rate of tax
4. Supplies that are wholly exempted from SGST, UTGST, IGST or Cess and
5. Supplies that are not taxable under the Act (alcoholic liquor for human consumption
and articles listed in section 9(2) and in Schedule III)
Export of goods or services or both, including zero-rated supplies
Aggregate Turnover is relevant to a person to determine:
 Threshold limit to opt for composition scheme: Rs 1.5 crore in a financial year (Rs 75 lakh in
case of supplies effected from special category states)
 Threshold limit to obtain registration under the Act (exclusively supply of goods) : RS 40 lakh
(Rs 20 lakh in case of supplies effected from special category states)
 Threshold limit to obtain registration under the Act(supply of Services or (goods and services
both)) : RS 20 lakh (Rs 10 lakh in case of supplies effected from special category states)
 Inter state supplies between units of a person with the same PAN(Distinct person) will also form
part of aggregate turnover.
 For an agent, the supplies made by him on behalf of all his principals would have to be
considered while analyzing the threshold limits
 For a job worker, the following supplies effected on completion of job work would not be
included in this aggregate turnover when working under Sec 143
1. Goods returned to the principal
2. Goods sent to another job worker on the instruction of the principal
3. Goods directly supplied from the job worker’s premises (by the principal); it would be
included in the aggregate turnover to the principal.
Turnover Meaning under GST Audit
Every business entity having a turnover exceeding INR 20,00,000 (20 lakhs) in a
financial year is required to be registered under the GST Act.
Turnover means the aggregate annual sales of the business after providing discounts.
Every entity whose aggregate turnover of the business exceeds INR 20,00,000 (20
lakhs) in a financial year is mandatorily required to register under Goods and Services
Tax. For North-eastern and hilly states including J&K (i.e. Arunachal Pradesh, Mizoram,
Tripura, Himachal, Nagaland, Sikkim, Assam, Jammu & Kashmir, Manipur, Meghalaya,
Pradesh and Uttarakhand), the limit is restricted to INR 10,00,000.
What is Audit under Goods and Service Tax (GST)?
Under section 2(13) of the CGST Act, an audit has been defined as an examination of
records, returns and other relevant documents furnished or maintained by the person
registered under the GST Acts or under any other law for the time being in force. GST
audit is conducted to verify the correctness of taxes paid, turnover declared, input tax
credit (ITC) availed and a refund claimed, and to assess the compliance of the
registered person with the provisions of the Acts and the rules made thereunder.
Every person registered under GST Act, whose aggregate turnover exceeds the
prescribed limit (i.e. 2 crore rupees) during the financial year, is required to get his
books of accounts audited by a (CA) Chartered Accountant or a (CMA) Cost and
Management Accountant. The person registered under GST who is required to get his
books of accounts audited under GST Act shall submit the Annual Return electronically
along with a reconciliation statement, reconciling the declared value of supplies in the
GST return furnished for the financial year and a copy of the audited statement of
accounts. Both the reconciliation statement and the copy of audited annual accounts,
duly certified, is to be furnished by the registered person in Form GSTR-9C along with
the annual return.
The person registered under the GST Act, for facilitating the GST audit, shall keep and
maintain his accounts to show the correct value in regards to:
 Outward supply of goods or services or both
 Stock of goods
 Production or manufacture of goods
 Inward supply of goods or services or both
 Books of accounts point can be added
 Input tax credit availed
 Output tax payable and paid
What is Aggregate Turnover in GST?
The “aggregate turnover” is the aggregate value of all taxable supplies, exports of
goods or/and services or both, exempt supplies and interstate supplies of persons
having the same PAN, to be computed on all India basis. However, such taxable
supplies do not include the value of inward supplies on which GST is being paid under
reverse charge basis. The aggregate turnover also excludes Central tax, State tax,
Union territory tax, Integrated tax and cess.
In other words, the total of the following shall be considered as an aggregate turnover:
 Value of all taxable supplies of goods and services
 Value of all Inter-state supplies
 Value of all exempt supplies of goods and services
 Value of all export of goods or services or both
Turnover would, therefore, include the following:
 All taxable supplies other than supplies on which reverse charge is applicable.
 Supplies between distinct entities (in different States or separate business vertical).
 Goods supplied to job worker on principal to principal basis.
 Export or zero rated supplies.
 Goods received from job worker on principal to principal basis.
 Supplies of agents/ job worker on behalf of the principal.
 Exempt supplies under GST: exempt via any notification, non-taxable supplies (like Diesel,
Petrol, Liquor etc.)
 Taxes other than those under GST
However, the following items would be excluded from Turnover:
 Inward supplies on which taxes are paid under reverse charge
 Taxes and cesses under Goods and Service Tax
 Goods supplied for or received back u/s 143 (job work)
 Interstate supply of services
 Transactions which are neither supply of goods or service.
 Supplies provided outside India or received outside India
As per section 2(47) exempt supply means any supply of goods or/and services or both
which may be wholly exemption from tax under section 6 or under section 11 of the
IGST Act or attract nil rate of tax, and includes non-taxable supply.
GST Audit Threshold and Rectifications
If the turnover of the registered person exceeds the prescribed limit i.e. rupees 2 crores
in a financial year, then the registered person shall get his accounts audited by a (CA)
Chartered Accountant or a (CMA) Cost & Management Accountant as per GST Rules.
The annual return is required to be filed electronically through Form GSTR 9B, along
with the audited statement of annual accounts, the reconciliation statement and other
documents as prescribed as per the GST law.
If any mistake/error is noticed in any filled returns during the financial year while auditing
the books of accounts, the same can be rectified only in the annual return.
What is the meaning of ‘aggregate
turnover’?
‘Aggregate turnover’ is defined to mean aggregate value of all taxable supplies, exempt
supplies, exports of goods and/or services and inter-State supplies of a person having
the same Income Tax Permanent Account Number (PAN), to be computed on all India
basis. Tax charged under the CGST Act, SGST Act, UTGST Act, IGST Act and
Compensation Cess Act, as the case may be, will not form part of turnover.
However any tax charged under any other enactments (such as Excise Duty charged by
Centre on tobacco products, Mandi Fees on agricultural and dairy commodities charged
in States) will form part of turnover. Value of supplies, on which tax is payable on
reverse charge basis will also not form part of turnover for this purpose.