What happens to GST Output Tax when RCT is Reversed after filing?

When Reverse RCT is being executed, the transaction will be captured as in the Transaction date, not reversal date.

Note: This MAY require GST Filing of Reverse RCT, in a new revision of Filing Cycle that corresponds to the original Transaction date.

Example 1: If the RCT is created on 1st December 2016, and the RCT is reversed on 5th December 2016, the EMP system will capture the Reverse RCT as in 1st December 2016. 

Example 2: If the RCT is created on 1st December 2016, and the RCT is reversed on 5th February 2017, the EMP system will capture the Reverse RCT as in 1st December 2016. In this case, GST Filing of Reverse RCT needs to be done in December2016 (revision2) filing cycle, as GST submission for December 2016 has to be done by 31st January 2017.

Example 3: RCT is reversed due to human error. For instance, the amount should be keyed in as RM168, but accidentally keyed in as RM186. Therefore, RCT is reversed.

Usually, Payment Voucher is issued to refund the deposit instead of Reversing RCT because it may affect the bank reconciliation.  

After the RCT is reversed, users need to perform bank reconciliation again for the month of the original RCT document date.  

It is advised the users to issue Payment Voucher to refund whenever possible, instead of opting for Reverse RCT. Reverse RCT is usually performed for special cases or for transactions that may affect the Bank Reconciliation. 

There are several situations occur for reversing the RCT. The following journal entries occur before GST filing takes place:

Comparisons are made before and after Reversing RCT to obtain a better view of the transactions. 

Case 1: Deposit (RCT) is created and cash received from customer first. Later, the customer cancels the purchase. Therefore, the RCT needs to be reversed and cash will be refunded. In this case, the Invoice has not been created yet, nor, the inventory has any transactions. 

Case 2: Deposit (RCT) is created and cash received from customer first. Next, invoice is created and items were delivered to the customer. Later, the customer wants to return the items (sales return). Therefore, the RCT needs to be reversed and cash will be refunded. In this case, the Inventory is affected. 
Note: 1) If the user needs to cancel the Invoice that was used to settle the RCT, it needs to be cancelled manually, and the system will auto-create Sales Return and Credit Memo.
         2) EMP system will not auto-cancel the Invoice upon Reversing the RCT. Cancelling Invoice has to be done manually (only if needed to cancel).
         3)  The Invoice may be left uncancelled if the Invoice were to be used in the future or to receive future payment from the customer. 

Output Tax Filing

The issue rises when the GST Output Tax is filed monthly, and the transaction takes place as per following example:

The due date to file GST Output Tax is 1 month after the last date.

Therefore, the Reverse RCT is executed in January 2017, but the system will capture the RCT document date.

The upgraded EMP system now permits the execution of Reverse RCT after filing the Output Tax.

The following are the sample steps performed for Deposit RCT, Invoice, Filing Output Tax and Reverse RCT.

For the companies that files Output Tax on Quarterly basis or 6 months basis, Reversing RCT on the same taxable period as the original RCT transaction date will not affect the GST Filing and Return process.  

However, for the companies that practices GST Filing and Return process on Monthly basis, Reversing RCT on different taxable period from the original RCT transaction date (different month), may need the company to submit 2nd filing cycle. 

Note: Please refer to GST Royal Customs Official Website for further explanation on penalties.
GST Royal Customs Official Webpage