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Accounting Entries under GST

Accounting Entries by Businesses other than those Registered under Composition Scheme

The Accounts to be maintained by a normal dealer are

  • Input CGST A/c
  • Input SGST A/c
  • Input IGST A/c
  • Output CGST A/c
  • Output SGST A/c
  • Output IGST A/c
  • GST Payable

The person who is registered in Union Territory has to pay and thus maintain UTGST account in lieu of SGST account. So for the entries and examples given below such persons has to simply replace UTGST with SGST.

You can also take our accounting services starting from just Rs. 3,000 per month.

Intra State Sales (Sales within same state or union territory)

  1. Purchase by X from Z who is in same state for Rs. 8,000 and  GST rate of 18% (CGST@9% & SGST@9%)Purchase A/c Dr       8,000
    Input CGST A/c Dr      720
    Input SGST A/c Dr      720
    To Z A/c                            9440
  2. Sales by X to Y who is in same state for Rs. 25,000
    Y A/c Dr     29,500
    To Sales A/c                 25,000
    To Output CGST A/c       2,250
    To Output SGST  A/c      2,250
  3. He paid consultation fees to CA of rs. 5,000
    Consultation Fees A/c Dr    5,000
    Input CGST A/c Dr                   450
    Input SGST A/c Dr                   450
    To CA A/c                                          5,900
  4. Purchased furniture worth Rs. 3,000
    Furniture A/c Dr                     3,000
    Input CGST A/c Dr                   270
    Input SGST A/c Dr                   270
    To Cash A/c                                          3,540

Total Inputs and Output taxes

Input CGST  = 720 + 450 + 270 = 1,440
Input SGST  = 720 + 450 + 270 = 1,440
Output CGST = 2,250
Output SGST = 2,250

  1. On month end for GST Payable
    Output CGST A/c Dr   2,250
    Output SGST A/c Dr   2,250
    To Input CGST A/c        1,440
    To Input SGST A/c        1,440
    To GST Payable A/c      1,620

Please note that there are some rules and restrictions on input tax credit and above entries will be made only for those purchases on which ITC is allowed. For eg- GST paid on purchase of motor car is not allowed except for certain persons. For a person to whom ITC is not allowed, accounting entry will be
Car A/c Dr  5,00,000
To Bank A/c     5,00,000

You can easily calculate the ITC admissible between IGST, CGST and SGST and GST payable using our GST ITC and Payment Calculator

Inter State Sales (Sales outside state or union territory)

  1. Purchase by X from Z who is in different state for Rs. 8,000 and  GST rate of 18% (CGST@9% & SGST@9%)
    Purchase A/c Dr       8,000
    Input IGST A/c Dr      1,440
    To Z A/c                                  9,440
  2. Sales by X to Y who is in different state for Rs. 25,000
    Y A/c Dr     29,500
    To Sales A/c                 25,000
    To Output IGST A/c       4,500
  3. He paid consultation fees to CA of rs. 5,000
    Consultation Fees A/c Dr    5,000
    Input CGST A/c Dr                   450
    Input SGST A/c Dr                   450
    To CA A/c                                          5,900
  4. Sales by X to B who is in same state for Rs. 30,000
    Y A/c Dr     35,400
    To Sales A/c                 30,000
    To Output CGST A/c       2,700
    To Output SGST  A/c      2,700

Total Inputs and Output taxes

Input CGST  = 450
Input SGST  = 450
Input IGST = 1,440
Output CGST = 2,700
Output SGST = 2,700
Output IGST = 4,500

  1. On month end for GST Payable
    Output CGST A/c Dr   2,700
    Output SGST A/c Dr   2,700
    Output IGST A/c Dr    4,500
    To Input CGST A/c        450
    To Input SGST A/c        450
    T0 Input IGST A/c      1,440
    To GST Payable A/c      7,560

Please note that there are some rules and restrictions on input tax credit and above entries will be made only for those purchases on which ITC is allowed.

You can easily calculate the ITC admissible between IGST, CGST and SGST and GST payable using our GST ITC and Payment Calculator

Impact on Profit and Loss Account and Balance Sheet

All tax accounts are not in the nature of direct/indirect incomes or expenses, therefore there will be no impact on the Profit and Loss account. However if there is any GST paid for which input tax credit is not allowed then it should be booked as expense and thus reducing the profit. (In case payment is for an expense)

The tax liability or positive input tax credit is to be shown as liability or asset in the balance sheet. Fixed assets on which input tax credit is allowed and taken are to be shown as cost excluding gst.

Accounting Entries by Composition Dealer

Persons registered under composition scheme are not allowed to take input tax credit of tax paid and also not to charge gst from the customer. They also can not make inter state sales.

Therefore they are not required to maintain accounts for input and output gst. They have to make very simple entries as follows

  1. On sale of goods
    Cash A/c Dr  5,000
    To Sale A/c        5,000
  2. On Purchase of goods
    Purchase A/c Dr 4,000
    To Cash A/c              4,000
  3. On purchase of Capital asset
    Furniture A/c Dr   1,500
    To   Cash A/c              1,500
  4. On payment of Composition Fees
    Composition Fees A/c Dr     25
    To Bank A/c                                25

Impact on Profit and Loss Account and Balance Sheet

Composition fees is an expense and thus show as  indirect expense in profit and loss account. There will be no impact on the Balance Sheet. All capital assets are shown at Cost including GST.

GAAP is applicable mandatorily on GST. So, all principles following revenue recognition etc. will be applicable.

Accounting Entries for Transactions under Reverse Charge

At time of purchasing such goods/ services:

Purchase A/c Dr
Input SGST A/c Dr
Input CGST Ac Dr
To Creditor A/c
To Output SGST RCM A/c
To Output CGST RCM A/c

In case of purchase of asset or expense, specific account will be debited. Output SGST RCM A/c  is used in place of normal Output SGST A/c to differentiate both taxes as taxes under RCM can not be adjusted against input taxes and has to be paid in cash.

At time of payment of gst

Output SGST RCM A/c
Output CGST RCM A/c
To Cash/Bank A/c

Know more about Reverse Charge Mechanism

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