What is the best way to enter a refund/return on a cash purchase?
Should I enter a negative number in the payment tab,
or should I use that receipt tab and record it as if somebody payed me.
This is for a non-inventory, tax exempt item.
I assume you mean that you purchased something and the seller is giving the refund to you, not that you are giving a refund to a customer.
The financial result would be the same either way, but it is probably more straightforward to record the refund as a receipt, since you received the money.
You will also note that receipts and payments are in the same tab. The selection of receipt or payment just changes the sign of the transaction.