Reviewed by Aug 27, 2020| Updated on
A receipt refers to a written record or acknowledgement of paying a sum of money in return for goods or services. Receipts are provided by sellers of goods or service providers against the payment made by the customer. Not just business to consumer dealings (B2C), receipts have to be provided in business to business dealings (B2B) as well.
A receipt serves as documentary evidence for the purchase of goods which may be consumables, personal use goods, electronics, and so on. Similarly, in the service industry, receipt acts as evidence for the use of a service, such as a lawyer’s service, consultation, and medical prescription from a doctor or hospital. In the case of any need to exchange goods or resolve any concerns with the service provider, the receipt acts as evidence for the consumer.
In the case of business to business transactions, the receipts for purchases of raw materials or trading goods will constitute business purchases. The receipts act as evidence of purchases and claim for business expenses and filing of monthly and yearly tax returns. The receipts also help in tracking payments to vendors and accounting for the transactions.
Similarly, in the process of banking, a customer having a bank account will obtain a receipt for cash and cheque deposits and withdrawals. A holder of a bank account can also download receipts for electronic transactions, such as transfer of money, payment by credit card or debit cards.
A person making investments will also obtain deposit receipts in the case of fixed deposits made in a bank, a receipt for PPF deposits, mutual funds investments, stock market transactions and so on. These receipts will act as evidence of the investments and enable entry into the records of the investor.
Generating and providing receipts to customers is mandated under the business laws of the land. The law also advises that you retain the receipts for a specified period for the purpose of audit or assessments. In India, the Goods and Service Tax Law and Income Tax Act, 1961 mandate the maintenance of records of receipts.