Accounting Entries under GST

Prakash Matre
Prakash Matre at May 17, 2023

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GST Accounting Entries

Goods & Services Tax (GST) was implemented in India from 1st July 2017. Since then, the GST Council has been working to make the rules easier to make businesses easier and simplified GST entries help us understand transactions in a better way. The Customs and Excise Act in India is a comprehensive, multi-category, tax-deductible tax on all value additions. which also have the same GST journal entry and purchase entry with GST or sales entry with GST

In simple terms, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. GST accounting law replaces many of the indirect tax laws that existed in India before.

In this article, we will learn about Accounting Entries under GST and GST Entry, what GST input receivable account is, GST input receivable a/c is, 

Under the GST number search regime, the taxpayer is required to maintain the following accounts which is said to be GST payable journal entry in tally and also input cgst in trial balance.

  •  CGST A / C

CGST A / C is also divided into Output CGST and Output CGST.

  • SGST A / C

SGST A / C is also divided into Output SGST and Output SGST.

  • IGST A / C

IGST A / C is further divided into Output IGST and Input IGST.

  • e-Cash Ledger or electronic money ledger

This book is kept by the taxpayer on the GST Portal to pay GST

Accounting inputs under GST

We will be taking a few business transactions to understand the ones included in the GST port code entry process that will be approved in eway bill adn we’ll also discuss what is GST in accounting

Example 1:

  1. Mr. A bought goods worth 10,000 INR at the local market.
  2. He sold the goods for 30,000 INR in the same region
  3. He paid a consultation fee of 500 INR
  4. As Mr. A was thinking of expanding the business, he was buying furniture worth about 10,000 INR.

Taking CGST @ 8% and SGST @ 8% GST Accounting entries: The accounting Journal entries with GST will be:

S. No Details Debit Credit
1 Purchase A / c Dr   10,000    
  CGST Input Dr   800    
  SGST Input Dr 800    
  To Creditors  A / c (Purchase journal entry with GST)   11,600  
2 Debtors A/c Dr 34,800  
  To Sales A / c   30,000
  To Output CGST A/c     2,400
  To Output SGST A/c(sales entry with GST)     2,400
3   Consultation fee A / c Drs   500  
  CGST Input Dr   40    
  Input SGST Dr   40  
  To Bank A / c     580
4 Furniture A / c  Dr 10,000    
  CGST Input A/c  Dr 800  
  SGST Input A/C Dr   800  
  To ABC furniture A/c   11,600

By GST Entry in Tally we get, Total Input CGST = 800 + 40 + 800 = 1,640 INR Total Input SGST = 800 + 40 + 800 = 1,640 INR Total output CGST = 2,400 INR Total SGST output = 2,400 INR Therefore, NET CGST to be paid = 2,400 - 1,640 = 760 INR NET SGST to be paid = 2,400 - 1,640 = 760 INR

Impact of GST on Financial Statements

Let's understand the impact of GST on the financial statements Profit and Loss Statement and what is GST in accounting.

Details   Price (INR)   Details   Price (INR)  
Raw material   XXXX   Sales   XXXX  
Purchases   XXXX      
Depreciation   XXXX      
Other costs   XXXX      

You will experience a decrease in the cost of raw materials, purchases, and other costs since the taxpayer can avail ITC on these expenses in GST return.

Balance Sheet

Assets Amount (INR) Liabilities Amount (INR)
Capital XXXX Fixed Assets XXXX
Current Liabilities XXXX Current Assets XXXX
Tax Payable XXXX Bill Receivable XXXX
Bills Payable XXXX Credit Receivable XXXX

Under accounting for GST journal entries, the cost of fixed assets will also decrease as the taxpayer can avail ITC (Input Tax Credit) on fixed assets.

Prerequisite for keeping records and accounts under GST calculations

The Central Government also issued draft rules for GST Accounts and Records (draft rules of records), including an additional list of GST accounting and record-keeping requirements. The business owner or operator of the facility used for storage must ensure books of accounts are available till the time the goods are in storage. This includes details relating to the shipment, delivery, receipt, and disposal of goods. The carrier of goods and services must keep records of the goods delivered, delivered, and the goods stored for delivery. Under the GST code regime, all records and accounts must be kept at a central place where all business transactions take place. In the event that more than one location is mentioned in the registration certificate, records and accounts associated with each place of business must be kept as and where the accounts relate to. If records are kept electronically, business owners must ensure proper record keeping/accounts. Also, all records should be ready to be displayed whenever required. Where the profit of the entity exceeds the prescribed financial limit, the entity is responsible for the audit.

Every business owner registered under GST must keep the following records

  • Manufacturing or manufacturing of goods - Details of all goods made or produced by the taxpayer.
  • Purchase Details through purchase entry with GST - Details of all taxpayer purchases, including the name and address of the supplier.
  • Sales details - Details of all exports sold by the taxpayer, including the buyer's name and address.
  • Inventory - The current value of assets found in the taxpayers' list.
  • Input Tax Credit Acquired - Income Tax Amount earned during the purchase of equipment or other capital assets.
  • Export Tax - Export Tax on the sale of completed goods or services.
  • Withdrawal paid - GST paid input tax or cash.
  • Any other record if applicable - Any other record required by the Government for a particular type of business.
  • Goods or services imported or exported during the tax period.
  • GST payable journal entry and GST receivable entry should be made.
  • Internal and external assets that attract tax returns, as well as relevant documents such as invoices, delivery bills, delivery challans, credit notes, debit notes, payment vouchers, payment vouchers, refund vouchers and e-way bills.


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