Under the GST regime the taxpayer needs to maintain the following accounts:
(i) CGST A/C
CGST A/C is further bifurcated into two Output CGST and Input CGST.
(ii) SGST A/C
SGST A/C is further bifurcated into two Output SGST and Input SGST.
(iii) IGST A/C
IGST A/C is further bifurcated into two Output IGST and Input IGST.
e-Cash Ledger or electronic cash ledger
This ledger is maintained by the taxpayer on the GST Portal to pay GST
Accounting entries under GST
Accounting entries under GST
We are taking a few basic business transactions to understand accounting entries under GST that shall be passed.
Instance 1:
- Mr. A bought goods worth 10,000 INR from the local market.
- He sold these goods for 30,000 INR in the same state
- He paid consultation fees 500 INR
- As Mr. A was thinking to extend the business he purchases furniture amounting 10,000 INR.
Assuming CGST @8% and SGST@8%
The accounting entries under GST will be:
S. No | Particulars | Debit | Credit |
1 | Purchase A/c…Dr | 10,000 | |
Input CGST…Dr | 800 | ||
Input SGST…Dr | 800 | ||
To Creditors A/c | 11,600 | ||
2. | Debtors A/c…Dr | 17,400 | |
To Sales A/c…Cr | 30,000 | ||
To output CGST A/c…Cr | 2,400 | ||
To Output SGST A/c…Cr | 2,400 | ||
3. | Consultation fees A/c…Dr | 500 | |
Input CGST…Dr | 40 | ||
Input SGST…Dr | 40 | ||
To Bank A/c…Cr | 580 | ||
4. | Furniture A/c…Dr | 10,000 | |
Input CGST…Dr | 800 | ||
Input SGST…Dr | 800 | ||
To XYZ furniture shop | 11,600 |
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 output SGST= 2,400 INR
Therefore,
Net CGST payable = 2,400 – 1,640 = 760 INR
Net SGST payable = 2,400 – 1,640 = 760 INR
Instance 2:
- A bought goods worth 10,000 INR from outside state market.
- He sold these goods for 20,000 INR in the same state
- He sold the other goods manufactured for 10,000 INR in the different state
- He paid consultation fees 500 INR
- As Mr. A was thinking to extend the business he purchases furniture amounting 10,000 INR.
Assuming CGST @8%, SGST@8% ,and IGST @5%
The accounting entries under GST will be:
S. No | Particulars | Debit | Credit |
1 | Purchase A/c…Dr | 10,000 | |
Input IGST…Dr | 500 | ||
To Creditors A/c | 10,500 | ||
2. | Debtors A/c…Dr | 17,400 | |
To Sales A/c…Cr | 20,000 | ||
To output CGST A/c…Cr | 1,600 | ||
To Output SGST A/c…Cr | 1,600 | ||
3. | Debtors A/c…Dr | 10,500 | |
To Sales A/c | 10,000 | ||
To Output IGST A/c | 500 | ||
4. | Consultation fees A/c…Dr | 500 | |
Input CGST…Dr | 40 | ||
Input SGST…Dr | 40 | ||
To Bank A/c…Cr | 580 | ||
5. | Furniture A/c…Dr | 10,000 | |
Input CGST…Dr | 800 | ||
Input SGST…Dr | 800 | ||
To XYZ furniture shop | 11,600 |
For Intra-State Transaction
Total Input CGST = 40 + 800 = 840 INR
Total Input SGST= 40 + 800 = 840 INR
Total output CGST= 1,600 INR
Total output SGST= 1,600 INR
Therefore;
Net CGST payable = 1,600 – 840 = 760 INR
Net SGST payable = 1,600 – 840 = 760 INR
For Inter-State Transaction
Total IGST input = 500 INR
Total IGST output = 500 INR
Therefore;
Net IGST Payable = 500 – 500 = 0 INR
Impact of GST in financial statements
Let us understand the impact of GST in the financial statement
Profit and Loss Statement
Particulars | Amount (INR) | Particulars | Amount (INR) |
Raw material | XXXX | Sales | XXXX |
Purchases | XXXX | ||
Depreciation | XXXX | ||
Other expenses | XXXX |
Here you can see the decrease in the raw material cost and other expenses as under GST a taxpayer can sett-off input GST with that of Output GST.
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 GST, the cost of fixed assets will also decrease as the taxpayer can take ITC (Input Tax Credit) on both the capital goods and services that are related to such capital goods like installation, assembling and so forth.