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Accounting Entries in GST, How to pass journal entries In GST: GST has superseded the multi-layered Indirect tax structure of India existing since a moon years ago which consisted of 17 taxes and 23 cesses levied by the Centre and the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/cCr.
To CGST Output A/cCr.
To SGST Output A/cCr.
To IGST Output A/cCr.

Purchase

Purchases A/c..Dr
CGST Input A/c..Dr
SGST Input A/c..Dr
IGST Input A/c..Dr
ToCreditors A/cCr.

Expenses

Expenses A/c..Dr
CGST Input A/c..Dr
SGST Input A/c..Dr
IGST Input A/c..Dr
ToBank A/cCr.

RCM

Expenses A/c..Dr
RCM CGST Input A/c..Dr
RCM SGST Input A/c..Dr
RCM IGST Input A/c..Dr
ToBank A/cCr.
ToRCM CGST Payable A/cCr.
ToRCM SGST Payable A/cCr.
ToRCM IGST Payable A/cCr.

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
ToCGST Payable A/cCr.
ToSGST Payable A/cCr.
ToIGST Payable A/cCr.
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
ToCGST Input A/cCr.
ToSGST Input A/cCr.
ToIGST Input A/cCr.
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
ToRCM CGST Input A/cCr.
ToRCM SGST Input A/cCr.
ToRCM IGST Input A/cCr.
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
ToBankCr.
(Being GST payable on RCM Basis paid in Cash)
CGST Payable A/c
SGST Payable A/c
IGST Payable A/c
ToBankCr.
(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…………..Dr1,00,000
Input CGST A/c                        .Dr.8,000
Input SGST A/c                         Dr.8000
To Creditors A/c1,16,000
Debtors A/c…………..Dr1,74,000
To Sales A/c1,50,000
To Output CGST A/c12,000
To Output SGST A/c12,000
Legal Fees A/c…………..Dr5000
Input CGST A/c…………..Dr400
Input SGST A/c…………..Dr400
To Bank A/c5800
4Furniture A/cDr    12,000.00
Input CGST A/cCr          960.00
Input SGST A/cCr          960.00
To Ratti Ram & Garg Furniture ShopCr    13,920.00
Total Input CGST= 8,000+400+960Rs. 9,360
Total Input SGST= 8,000+400+960= Rs. 9,360
Total output CGST12,000
Total output SGST12,000
Net CGST payable= 12,000-9,360=2,640
Net SGST payable=12,000-9,360=2,640
5Output CGST A/cDr    12,000.00
 Output SGST A/cDr    12,000.00
To Input CGST A/cCr      9,360.00
To Input SGST A/cCr      9,360.00
To Electronic Cash Ledger A/cCr      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]%

1Purchase A/cDr 1,50,000.00
Input IGST A/cDr    24,000.00
To Creditors A/cCr 1,74,000.00
2Debtors A/cDr 1,74,000.00
To Sales A/cCr 1,50,000.00
To Output CGST A/cCr    12,000.00
To Output SGST A/cCr    12,000.00
3Debtors A/cDr 1,16,000.00
To Sales A/cCr 1,00,000.00
To Output IGST A/cCr    16,000.00
4Legal fees A/cDr      5,000.00
Input CGST A/cDr          400.00
Input SGST A/cDr          400.00
To Bank A/cCr      5,800.00
5Furniture A/cDr    12,000.00
Input CGST A/cCr          960.00
Input SGST A/cCr          960.00
To Ratti Ram & Garg Furniture ShopCr    13,920.00
Total Input CGST= 400+960Rs. 1,360
Total Input SGST= 12,000
Total output CGST= 400+960Rs. 1,360
Total output SGST= 12,000
Net CGST payable= 24,000
Net SGST payable=16,000
ParticularsCGSTSGSTIGST
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
1Output CGST A/cDr   9,360.00
To Input CGST A/cCr   1,360.00
To Input IGST A/cCr   8,000.00
Setoff against SGST Output
2Output SGST A/cDr   1,360.00
To Input SGST A/cCr   1,360.00
Setoff against IGST Output
3Output IGST A/cDr 16,000.00
To Input IGST A/cCr 16,000.00
Final Payment
4Output 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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