Case study: money that came back

Some money leaves and comes straight back, or arrives and goes straight back out. Both movements are real, both are on your statement, and neither is income or spending. Counted plainly they inflate both sides of your return by the same amount, so every figure built on them is wrong twice over.

This page works through three real situations end to end.

First, the thing people ask for and why it does not exist

"Can I make one category for Muhammad Amjad, put both the rent I received and the refund I sent him into it, and see the net?"

No — and the reason matters. Every category in the tree sits under either Credit > or Debit >. That is not an oversight: your return has separate lines for what you received and what you may deduct, so a category straddling both would have nowhere to land.

What does span both sides is a label. Put the same label on both rows and open Labels in use for the tax year: one line, one figure, both sides netted. Rent of Rs 62,500 received with Rs 12,500 returned reads as Rs 50,000, which is what you actually earned and what no category can ever show you.

Clicking a label opens everything under it. If a row does not belong, you have two different fixes there and they are not interchangeable — Remove label takes the label off and leaves the category exactly as it is, while Not this category sends the row back to the review queue and keeps the label on it.

A label changes nothing about your return. Each row still counts on its own, under its own category. The net is a way of seeing, not a way of reporting — which is why money that does not count at all is listed beside the net there and never inside it.

Case 1 — A payment your recipient could not accept

You paid an exchange Rs 280,000 for foreign currency from your company account. They said they cannot take money from a company account and sent it back — from a different account of theirs.

Nothing happened. You have the same money you started with.

Step by step — the short way

1. Open the ledger and find the payment that went out. Change its category to Debit > Reversed & Void (cancels out - counts as nothing) > Payment That Was Returned (refused, bounced or cancelled).
2. Find the money coming back. Change its category to Credit > Reversed & Void (cancels out - counts as nothing) > Payment Returned to You (refused, bounced or cancelled).

That is all. Both rows stop counting as income or spending, and each one now says "did not really happen" in your ledger so you can see at a glance why.

Do both, or neither. Filing only one leg is deliberately left visible: the other side goes on counting, and your totals will look wrong until you finish the job. That is on purpose — a half-done job that hid itself would be worse than one that nags.

What changes. Neither row counts as income or spending any more. Your account balance does not move at all, because the money genuinely travelled both ways and your statement proves it. Nothing is deleted or edited — both lines stay exactly as the bank recorded them.

Step by step — the precise way

Use this instead when only part of the money came back, where filing whole rows as void would take the good part out along with the bad.

1. Leave the payment on Debit > Asset Acquisition > Foreign Currency Purchase. Buying currency is swapping one asset for another, not spending — so it is not an expense even when the money does leave.
2. Leave the return on Credit > Recoveries & Refunds > Purchase Refund / Reversal.
3. Go to Cancelling rows for the tax year. This pair almost always appears under Rows that might cancel on its own — equal amounts, a few days apart, and out of and back into the same account.
4. Press These cancel. No amount to type: an equal-and-opposite pair cancels in full.

You cannot use both. A row filed as Reversed & Void is already out of your totals, so the app refuses to cancel it against anything as well — doing both would subtract the same Rs 280,000 twice, and nothing on screen would show it.

If it does not appear as a suggestion — because the amounts differ slightly, or more than 14 days passed — use Cancel two rows by hand lower down the same screen. Pick the money in, pick the money out, leave the amount blank, and write one line saying why.

The reason suggestions cannot catch every case: the money often comes back from a different account than it went to. Nothing keyed on who paid you could ever link the two, which is why a person declares it.

Case 2 — A tenant overpaid and you refunded the difference

Rent agreed at Rs 55,000. The tenant's company sent Rs 62,500 for a month. You returned Rs 12,500 to the tenant personally.

This one has a tax trap in it, so read the warning before the steps.

⚠️ The refund is not a deduction. What you may deduct against property income is a fixed statutory list — the repair allowance, the bank's share of the rent, and so on. A refund of overpaid rent is not on that list. Filed as an expense it would overstate your rental income and claim a deduction that does not exist — wrong twice, in a section that is easy to check. The correct treatment is that it reduces what you received.

Step by step

1. Categorise the receipt as usual: Credit > Property & Rental > Rental Income - Commercial (or - Residential). Enter the whole Rs 62,500 — never the net.
2. Categorise the refund as Debit > Property Expense > Rent Refunded / Overpaid Rent Returned. The name carries the warning: reduces receipts, not a deduction.
3. Tag both rows with the tenant's name — Amjad, say. This is what puts both sides of your dealings with one person in a single line later.
4. Go to Cancelling rows → Cancel two rows by hand.

- Money in: the Rs 62,500 rent receipt. - Money out: the Rs 12,500 refund. - Amount: 12500 — this is a partial cancellation, so the amount matters. - Why: something like "Company overpaid; balance returned to him personally."

1. Press Cancel these against each other.

What you get. Rs 50,000 of rental income counts and the refund counts as nothing — on the ledger, on the reconciliation screen, and on the IRIS worksheet, which is what the numbers are actually filed from. Scroll down to Net by tag and Amjad reads as one line with one figure.

Why the amount is not blank here. Leaving it blank cancels as much as both rows allow, which would be the full 12,500 in this case — the same answer. Type it anyway when the two rows are different sizes: it is the habit that keeps you honest when the receipt is 62,500 and the refund is 12,500 of it.

Case 3 — A security deposit you took, and returned at the end of the lease

You held a refundable deposit from your tenant. The lease ended and you paid it back.

This one is not a cancellation, and trying to make it one will not work. Cancelling only operates inside a single tax year, and a deposit is almost always taken in one year and returned in another.

Step by step

1. When you receive it: Credit > Property & Rental > Security Deposit Received (refundable). You are holding someone else's money — it is a liability, not rent.
2. When you return it: Debit > Property Expense > Security Deposit Refunded to Tenant. Repaying what you owed, not an expense.
3. Tag both with the tenant's name so the two halves are findable years apart, even though they sit in different tax years.

⚠️ Ask your lawyer about this one. Whether the deposit was adjustable against rent or not adjustable changes its tax treatment materially — the return carries a separate line for the non-adjustable kind, spread over ten years. The app records what happened and deliberately takes no position on which yours is.

What cancelling never does

• It never changes an account balance. Every account still reconciles exactly as before. What changes is what counts as income and what counts as spending.
• It never deletes anything. Both rows stay in your ledger, both stay searchable, and Undo on the Cancelling rows screen puts them back into your totals in full.
• It is refused on a transfer between your own accounts. Those are matched on the reconciliation screen and are already left out of your totals — cancelling one as well would subtract the same money twice.

When you are not sure

Do not cancel. An uncancelled pair overstates both your income and your spending by the same amount, which is visible and fixable. A wrongly cancelled pair quietly understates your income, which is neither. Leave it, and ask.