Accounting Entries in GST, How to pass journal entries In GST

Accounting Entries in GST, How to pass journal entries In GST: GST has superseded the multi-layered Indirect tax structure of India existing since a moon years ago which consisted of 17 taxes and 23 cesses levied by the Centre and the States. This was paramount to streamline the country’s $2-trillion economy and 1.3 billion people into a common market to give a push to ease of doing business in India. Here we provide Basic Journal Entries under GST Regime.

Accounting entries under GST, How to pass accounting entries In GST

GST Entries for Every Month

Sales

Debtors A/c ..Dr ..Dr
  To Sales A/c Cr.
  To CGST Output A/c Cr.
  To SGST Output A/c Cr.
  To IGST Output A/c Cr.

Purchase

Purchases A/c   ..Dr  
CGST Input A/c   ..Dr  
SGST Input A/c   ..Dr  
IGST Input A/c   ..Dr  
To Creditors A/c   Cr.

Expenses

Expenses A/c   ..Dr  
CGST Input A/c   ..Dr  
SGST Input A/c   ..Dr  
IGST Input A/c   ..Dr  
To Bank A/c   Cr.

RCM

Expenses A/c   ..Dr  
RCM CGST Input A/c   ..Dr  
RCM SGST Input A/c   ..Dr  
RCM IGST Input A/c   ..Dr  
To Bank A/c   Cr.
To RCM CGST Payable A/c Cr.
To RCM SGST Payable A/c Cr.
To RCM IGST Payable A/c Cr.

CLOSURE ENTRY TO BE PASSED ON THE LAST DAT OF MONTH

CGST Output A/c   ..Dr  
SGST Output A/c   ..Dr  
IGST Output A/c   ..Dr  
To CGST Payable A/c   Cr.
To SGST Payable A/c   Cr.
To IGST Payable A/c   Cr.
Note: After this entry, All GST output A/c Balance will become NIL
       
CGST Payable A/c   ..Dr  
SGST Payable A/c   ..Dr  
IGST Payable A/c   ..Dr  
To CGST Input A/c   Cr.
To SGST Input A/c   Cr.
To IGST Input A/c   Cr.
Note: After this entry, All GST input A/c Balance will become NIL
       
CGST Payable A/c   ..Dr  
SGST Payable A/c   ..Dr  
IGST Payable A/c   ..Dr  
To RCM CGST Input A/c Cr.
To RCM SGST Input A/c Cr.
To RCM IGST Input A/c   Cr.
Note: After this entry, All RCM input A/c Balance will become NIL
       
RCM CGST Payable A/c   ..Dr  
RCM SGST Payable A/c   ..Dr  
RCM IGST Payable A/c   ..Dr  
To Bank   Cr.
(Being GST payable on RCM Basis paid in Cash)    
       
CGST Payable A/c      
SGST Payable A/c      
IGST Payable A/c      
To Bank   Cr.
(Being GST payable after netting off of Outputs and Inputs paid)

Let us consider a few basic business transactions (all amounts excluding GST)

Example 1: Intra State (i.e Within State)

  1. X purchased goods Rs. 1,00,000 locally (intrastate)
  2. He sold them for Rs. 1,50,000 in the same state
  3. He paid legal consultation fees Rs. 5,000
  4. He purchased furniture for his office for Rs. 12000

Assuming CGST @8% and [email protected]%

The entries will be-

Purchase A/c…………..Dr 1,00,000  
Input CGST A/c                        .Dr. 8,000  
Input SGST A/c                         Dr. 8000  
To Creditors A/c   1,16,000
Debtors A/c…………..Dr 1,74,000  
To Sales A/c   1,50,000
To Output CGST A/c   12,000
To Output SGST A/c   12,000
Legal Fees A/c…………..Dr 5000  
Input CGST A/c…………..Dr 400  
Input SGST A/c…………..Dr 400  
To Bank A/c   5800
     
4 Furniture A/c Dr     12,000.00  
  Input CGST A/c Cr           960.00  
  Input SGST A/c Cr           960.00  
  To Ratti Ram & Garg Furniture Shop Cr       13,920.00
Total Input CGST = 8,000+400+960 Rs. 9,360
Total Input SGST = 8,000+400+960 = Rs. 9,360
Total output CGST 12,000  
Total output SGST 12,000  
Net CGST payable = 12,000-9,360 =2,640
Net SGST payable =12,000-9,360 =2,640
5 Output CGST A/c Dr     12,000.00  
  Output SGST A/c Dr     12,000.00  
  To Input CGST A/c Cr         9,360.00
  To Input SGST A/c Cr         9,360.00
  To Electronic Cash Ledger A/c Cr         5,280.00

Thus due to input tax credit, tax liability of Rs. 24,000 is reduced to only Rs. 5,280. Also, GST on legal fees is also adjusted which was not possible in current tax regime.

If there had been any input tax credit left it would have been carried forward to the next year

Example 2: Inter-state (i.e from one state to another)

  1. Mr. X purchased goods Rs. 1,50,000 from outside the State
  2. He sold Rs. 1,50,000 locally
  3. He sold Rs.1,00,000 outside the state
  4. He paid telephone bill Rs. 5,000
  5. He purchased an air cooler for his office for Rs. 12,000 (locally)

Assuming CGST @8% and [email protected]%

1 Purchase A/c Dr  1,50,000.00  
  Input IGST A/c Dr     24,000.00  
  To Creditors A/c Cr    1,74,000.00
2 Debtors A/c Dr  1,74,000.00  
  To Sales A/c Cr    1,50,000.00
  To Output CGST A/c Cr       12,000.00
  To Output SGST A/c Cr       12,000.00
3 Debtors A/c Dr  1,16,000.00  
  To Sales A/c Cr    1,00,000.00
  To Output IGST A/c Cr       16,000.00
4 Legal fees A/c Dr       5,000.00  
  Input CGST A/c Dr           400.00  
  Input SGST A/c Dr           400.00  
  To Bank A/c Cr         5,800.00
5 Furniture A/c Dr     12,000.00  
  Input CGST A/c Cr           960.00  
  Input SGST A/c Cr           960.00  
  To Ratti Ram & Garg Furniture Shop Cr       13,920.00
Total Input CGST = 400+960 Rs. 1,360
Total Input SGST = 12,000  
Total output CGST = 400+960 Rs. 1,360
Total output SGST = 12,000  
Net CGST payable = 24,000  
Net SGST payable =16,000  
Particulars CGST SGST IGST
Output Liability  12,000.00  12,000.00  16,000.00
Less: Input Tax Credit      
CGST    1,360.00    
SGST      1,360.00  
IGST    8,000.00    16,000.00
Amount Payable    2,640.00  10,640.00  NIL

Any IGST credit will first be applied to setoff IGST and then CGST. Balance if any will be applied to setoff SGST.

So out of total Input IGST of Rs. 24,000, firstly it will be completely setoff against IGST. Then balance Rs. 8,000 against CGST.

From the total Rs. 40,000, only Rs. 13,280 is payable.

SO THE SETOFF ENTRIES WILL BE-

  Setoff against CGST Output      
1 Output CGST A/c Dr    9,360.00  
  To Input CGST A/c Cr      1,360.00
  To Input IGST A/c Cr      8,000.00
  Setoff against SGST Output      
2 Output SGST A/c Dr    1,360.00  
  To Input SGST A/c Cr      1,360.00
  Setoff against IGST Output      
3 Output IGST A/c Dr  16,000.00  
  To Input IGST A/c Cr    16,000.00
  Final Payment      
4 Output CGST A/c      2,640.00  
  Output SGST A/c    10,640.00  
  To Electronic Cash Ledger A/c      13,280.00

Rates taken of CGST, SGST and IGST are for illustrative purposes only. 

That’s all for Accounting Entries Under GST. Keep Sharing.

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