Sales Returns — Debit Notes for Customer Returns
Recording sales returns using Alt+F8 Debit Note — Sunrise Retail's April 24 return from Digital Hub
Module 12 of 31 — Tally Prime. Sales returns — recording customer Debit Notes and output GST reversal. Duration: 40 min.
Prerequisites: Module 10 — Sales Voucher
Learning Objectives
- Record a sales return when a customer returns goods to Sunrise Retail
- Issue a Credit Note to the customer using
Alt+F8(Debit Note voucher) in Tally - Understand the output GST reversal impact on GSTR-3B and GSTR-1
- Enter Sunrise Retail's April 24 return of 2 phones from Digital Hub Retail, Secunderabad
Sales Return — The Concept
When a customer returns goods to you, two things happen:
- Stock comes back → inventory increases
- Customer's outstanding reduces → they owe you less
From Sunrise Retail's perspective: We issue a Credit Note to Digital Hub (we are crediting their account — reducing what they owe us).
In Tally Prime: Use Alt+F8 — this opens the Debit Note voucher. Tally calls this "Debit Note" because it debits the Sales ledger (reversing the sale). The physical document you give the customer is called a Credit Note.
Tally Key Sequence
Alt+F8 = Debit Note (sales return) in Tally Prime 4.x. Compare:
F8= Sales invoice (new sale)Alt+F8= Debit Note (reverse a sale / customer return)Ctrl+F8= Credit Note to customer (less common — used when you owe the customer money without a stock return)
Sunrise Retail — April 24: Return of 2 Phones from Digital Hub Retail
Digital Hub Retail Pvt Ltd, Secunderabad (GSTIN: 36AABCD5678G1ZQ) returns 2 Samsung phones from the April 10 sale (Invoice SR-2025-0042) due to a minor quality issue — the display has dead pixels.
- Original sale: SR-2025-0042, April 10 — 30 phones × ₹16,000 = ₹4,80,000 + CGST 9% + SGST 9% (intrastate Telangana)
- Return: 2 phones × ₹16,000 = ₹32,000 + CGST ₹2,880 + SGST ₹2,880
Debit Note Entry
Tally Screen ASCII — Debit Note (Alt+F8)
What Tally Records Automatically
Journal entry:
Stock movement:
Outstanding ledger — Digital Hub:
Output Tax Reversal in GSTR-3B
The return reduces Sunrise Retail's output tax liability:
Tally's GSTR-3B report automatically shows net figures when the Debit Note is linked to the original invoice.
Credit Note in Digital Hub's GSTR-2B
Credit Note CN-2025-0005 issued to Digital Hub (a GST-registered buyer) must be reported in Sunrise Retail's GSTR-1 Table 11 — Credit/Debit Notes for registered buyers.
Digital Hub sees this in their GSTR-2B and must reverse ₹5,760 (₹2,880 CGST + ₹2,880 SGST) from their ITC.
Tally auto-populates GSTR-1 Table 11 only when the Debit Note is created using Alt+F8 with the correct party GSTIN and the "Against Ref" field linked to the original invoice. Skipping the Against Ref means the reversal won't link correctly in GSTR reporting.
Practice Exercise
Exercise: CloudStore Online, Bangalore (GSTIN: 29AABCC9876B1ZH) returns 1 phone on May 2 from the April 12 sale (Invoice SR-2025-0048, rate ₹16,500, IGST 18% — interstate). Record the Debit Note in Tally.
Show Solution
This reduces May GSTR-3B IGST output by ₹2,970 and reduces CloudStore outstanding by ₹19,470.
Key Terms
| Term | Meaning |
|---|---|
| Debit Note (Alt+F8) | Tally voucher for sales returns — debits Sales ledger, reverses output tax |
| Credit Note issued | Physical document given to customer — CN-2025-0005 in this example |
| Output Tax Reversal | Reduction of CGST/SGST/IGST liability when sales are returned |
| Net Sales | Gross sales minus returns — the figure in GSTR-3B Section 3.1(a) |
| GSTR-1 Table 11 | Where credit/debit notes for registered buyers are reported |
| Ctrl+F8 | Alternative — Credit Note to a party (no stock) — used for adjustments without return of goods |
Module Summary
- Sales returns use
Alt+F8(Debit Note) in Tally — link via Against Ref to the original sales invoice - Sunrise Retail April 24: Digital Hub returns 2 phones (quality issue) → reduces receivable by ₹37,760, reverses output CGST ₹2,880 + SGST ₹2,880
- Net CGST output: ₹43,200 − ₹2,880 = ₹40,320; Net SGST output same
- Stock increases by 2 phones at the showroom godown
- Credit Note CN-2025-0005 auto-appears in Sunrise Retail's GSTR-1 Table 11
Checklist before moving on:
-
Alt+F8shortcut confirmed (Debit Note = sales return) - Debit Note linked to SR-2025-0042 via Against Ref
- Digital Hub outstanding = ₹5,28,640
- Output CGST/SGST each reduced by ₹2,880
- GSTR-1 Table 11 will show CN-2025-0005
Quick Quiz
1. In Tally Prime, sales return is recorded using:
- a) F9 (Purchase)
- b) Alt+F9 (Credit Note)
- c) Alt+F8 (Debit Note)
- d) F8 (Sales)
Answer
c) Alt+F8 — Debit Note is used for sales returns in Tally Prime. It debits the Sales ledger, reversing the original sale.
2. After the April 24 return from Digital Hub, their net outstanding is:
- a) ₹5,66,400
- b) ₹37,760
- c) ₹5,28,640
- d) ₹4,80,000
Answer
c) ₹5,28,640 — original outstanding ₹5,66,400 minus return credit note ₹37,760.
3. Credit Note CN-2025-0005 appears in Sunrise Retail's GSTR-1 under:
- a) Table 4 — B2B Invoices
- b) Table 11 — Credit/Debit Notes for registered buyers
- c) Table 7 — B2C Small
- d) Table 14 — HSN Summary
Answer
b) Table 11 — Credit/Debit Notes for registered buyers. Digital Hub is a GST-registered buyer, so the credit note goes in Table 11, not Table 9 (B2C).
4. The difference between Alt+F8 and Ctrl+F8 in Tally Prime is:
- a) Both are the same
- b) Alt+F8 is Debit Note (with stock return); Ctrl+F8 is Credit Note to party (no stock movement)
- c) Alt+F8 is for interstate; Ctrl+F8 for intrastate
- d) Ctrl+F8 is used for purchase returns
Answer
b) Alt+F8 (Debit Note) is for sales returns involving stock coming back. Ctrl+F8 (Credit Note to party) is for non-stock adjustments — price corrections, reversals where goods are not returned.