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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Query on Booking Other...
Small and medium business | Business Central, N...
Answered

Query on Booking Other Income via Purchase Credit Memo with GST & TDS

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Posted on by Jainam M. Kothari 17,024 Super User 2026 Season 1
Hello,
 
In Business Central (India localization), can a Purchase Credit Memo be used to post Other Income against a vendor, and how does the system handle GST and TDS implications in this case?
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Dynamics 365 Business Central
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  • Suggested answer
    Pallavi Phade Profile Picture
    Pallavi Phade 5,742 Super User 2026 Season 1 on at
     
    TDS is not considered in Purchase Credit memo as TDS is impacted in GL and it does not get consdired in Payables account . SO when you reverse a purhase invoice using credit memo , To reverse TDS effect you need to pass TDS Journal and get it adjusted against invoice 
     
    For GST , it will reverse accordingly as deducted in invoice . 
     
    If you can share an example then we can think how it can he handled with exact cost implicaiton
     
     
    Warm Regards
    Pallavi Phade
    www.linkedin.com/in/pallaviphade131116
  • Suggested answer
    Jainam M. Kothari Profile Picture
    Jainam M. Kothari 17,024 Super User 2026 Season 1 on at
    Namaste @Pallavi Phade,
     
    Thank you for your prompt response.

    This situation is not related to returning purchased materials.

    In this case, we purchase materials from the vendor, and we also provide lifting services to them. Therefore, the lifting service is considered as our other income.

    Accordingly, we have identified a solution: we will create a new customer for the vendor and generate a sales invoice to account for this other income.

  • Suggested answer
    Pallavi Phade Profile Picture
    Pallavi Phade 5,742 Super User 2026 Season 1 on at
     
    Ok Great , then no need of major customziation . You just ensure that vendor-customer is related . We can make customer from contact .
     
     
    Warm Regards
    Pallavi Phade
  • Suggested answer
    Assisted by AI
    OussamaSabbouh Profile Picture
    OussamaSabbouh 17,586 Super User 2026 Season 1 on at
    Hello,
    Yes, technically you can use a Purchase Credit Memo with a G/L Account line against a vendor, but I would not treat it as a normal “Other Income” posting without checking tax treatment first. In India localization, BC treats a purchase credit memo as a purchase return / vendor credit flow, so GST is reversed/calculated based on GST Group, HSN/SAC, GST Credit, vendor GST setup, etc.; Microsoft examples show the vendor credited/debited and GST receivable reversed accordingly. For TDS, the standard documented TDS + GST flow is on purchase transactions where TDS is calculated on the base amount, not GST, but a credit memo may behave as reversal/adjustment rather than a fresh income transaction. So if this is real income from the vendor, better confirm with your tax consultant whether it should be posted as a purchase credit note, sales invoice, or journal adjustment; from a BC point of view, the tax result will follow the GST/TDS setup on the document and line, not simply the G/L account name “Other Income”.
    Regards,
    Oussama Sabbouh
  • Suggested answer
    Jainam M. Kothari Profile Picture
    Jainam M. Kothari 17,024 Super User 2026 Season 1 on at
    Hello,
     
    Yes there is No need of Any Customization.
     
    Just we need to check the TDS impact on Sales Invoice.

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