Introduction-
GST Act was introduced in July 2017, after subsumed Indirect taxes of Central Government (i.e. Central Excise Duty, Custom duty, Additional Excise Duty Special Additional Duty, Central Sales Tax (CST), Service Tax or Surcharge & Cess etc.) or State Government (i.e. VAT, Entry Tax, Purchase Tax, Luxury Tax, Surcharge & Cess etc.).
Under GST regime, Accounting under pre and post is similar, like Input credit tax should be debited and outward tax liability should be credited. GST liabilities can be discharged as per rules given below, either by utilization of Input credit credits and the balance (if any payable) has to be paid by making payment through Cash or Bank Account.
- CGST Input Credit, First to utilize with Outward CGST and then Outward IGST
- SGST Input Credit, First to utilize with Outward SGST and then Outward IGST
- IGST Input Credit, First to utilize Outward IGST, then Outward CGST and then Outward SGST
Accounting entries under GST, for following transactions are as under-
- Receipt of goods or services
- Supply of goods or services
- Payment of GST
1. Receipt/Purchase of goods or services
After GST, There are 3 types of Ledger/accounts should be created in spite of VAT Receivable in their books of accounts and pass an accounting entry as shown below upon the nature of transaction whether it is Intra State or Inter State. We have to pass the following entries in our books of accounts are as under-
(i) CGST Input credit
(ii) SGST/UTGST Input credit
(iii) IGST Input credit
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Particulars
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Accounting Entry
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Intra-state transaction
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Purchase/Service expenditure A/c Dr.
CGST Input credit A/c Dr.
SGST Input credit A/c Dr.
To Creditors A/c
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Inter-state transaction
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Purchases/Service expenditure A/c Dr.
IGST Input credit A/c Dr.
To Creditors A/c
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2. Supply of goods or services
After GST, There are 3 types of Ledger/accounts should be created in spite of VAT Payable/CST Payable in their books of accounts and pass an accounting entry as shown below upon the nature of transaction whether it is Intra State or Inter State. We have to pass the following entries in our books of accounts are as under-
(i) CGST Outward
(ii) SGST/UTGST Outward
(iii) IGST Outward
(A) When time of supply is the date of invoice-
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Particulars
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Accounting Entry
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Intra-state transaction
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Debtors A/c Dr.
To Sales/Service income A/c
To CGST Outward A/c
To SGST Outward A/c
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Inter-state transaction
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Debtors A/c Dr.
To Sales/Service income A/c
To IGST Outward A/c
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(B) When time of supply is the date of payment
After GST, if a taxable person (supplier) receives payment (partly or fully) for supply of goods or services in advance, GST is levied on that amount. In such case, the payment is considered as inclusive of GST. We have to pass the following entries in our books of accounts are as under-
There are 3 types of Ledger/accounts should be created in their books of accounts-
(a) CGST Outward (Advance) A/c
(b) SGST Outward (Advance) A/c
(c) IGST Outward (Advance) A/c
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Particulars
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Accounting Entry
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Intra-state transaction-
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At the time of receipt of advance payment
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Cash/Bank A/c Dr.
To Party's A/c
To CGST Outward (Advance) A/c
To SGST Outward (Advance) A/c
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At the time of issue of invoice
-When invoice has issued in succeeding months of advance received
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Party's A/c Dr.
To Sales/Service income A/c
To CGST Outward A/c [Total liability- Already paid on Advance]
To SGST Outward A/c [Total liability- Already paid on Advance]
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At the time of issue of invoice
- When invoice has issued in same month in which advance received
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Party's A/c Dr.
CGST Outward (Advance) A/c Dr.
SGST Outward (Advance) A/c Dr.
To Sales/Service income A/c
To CGST Outward A/c
To SGST Outward A/c
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Inter-state transaction-
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At the time of receipt of advance payment
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Cash/Bank A/c Dr.
To Party's A/c
To IGST Outward (Advance) A/c
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At the time of issue of invoice
-When invoice has issued in succeeding months of advance received
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Party's A/c Dr.
To Sales/Service income A/c
To IGST Outward A/c [Total liability- Already paid on Advance]
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At the time of issue of invoice
- When invoice has issued in same month in which advance received
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Party's A/c Dr.
IGST Outward (Advance) A/c Dr.
To Sales/Service income A/c
To IGST Outward A/c
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(C) When time of supply is the date of provision of service (applicable only in case of supply of services)
After GST, in case of supply of service, time of supply may be determined as the date on which service is completed. In such case, GST liability arises as on the date of completion. We have to pass the following entries in our books of accounts are as under-
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Particulars
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Accounting Entry
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Intra-state supply
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At the time of provision of service
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Party's A/c Dr.
To CGST Outward A/c
To SGST Outward A/c
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At the time of issue of invoice
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Party's A/c Dr.
To Service income A/c
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Inter-state supply
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At the time of provision of service
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Party's A/c Dr.
To IGST Outward A/c
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At the time of issue of invoice
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Party's A/c Dr.
To Service income A/c
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3. Payment of GST liabilities can be discharged as per rules given below, either by utilization of Input credit credits and the balance (if any payable) has to be paid by making payment through Cash or Bank Account.
After GST, Input credit is allowed on both Intra-state purchase and Interstate purchase while before GST, Input credit was available only on Intra state purchases. We have to pass the following entries in our books of accounts are as under-
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Particulars
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Accounting Entry
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For payment of CGST Outward (CGST Outward, first to utilize with Input credit CGST, then Input credit IGST and then balance (if any) to be paid through Cash or Bank Account)
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Outward CGST A/c Dr.
To Input credit CGST A/c
To Input credit IGST A/c
To Cash/Bank A/c
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For payment of SGST Outward (SGST Outward, first to utilize with Input credit SGST, then Input credit IGST and then balance (if any) to be paid through Cash or Bank Account)
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Outward SGST A/c Dr.
To Input credit SGST A/c
To Input credit IGST A/c
To Cash/Bank A/c
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For payment of IGST Outward (IGST Outward, first to utilize with Input credit IGST, then Input credit SGST and then CGST and the balance (if any) to be paid through Cash or Bank Account)
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Outward IGST A/c Dr.
To Input credit IGST A/c
To Input credit SGST A/c
To Input credit CGST A/c
To Cash/Bank A/c
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