
- Excise payable a/c (for manufacturers)
- CENVAT credit a/c (for manufacturers)
- Output VAT a/c
- Input VAT a/c
- Input Service tax a/c
- Output Service tax a/c
- Output VAT a/c
- Input VAT a/c
- CST A/c (for inter-state sales and purchases)
- Service tax a/c [He will not be able to claim any service tax input credit as he is a trader with output VAT. Service tax cannot be setoff against VAT/ CST]
GST Regime
The same trader X has to then maintain the following a/cs (apart from accounts like purchase, sales, stock) –
- Input CGST a/c
- Output CGST a/c
- Input SGST a/c
- Output SGST a/c
- Input IGST a/c
- Output IGST a/c
- Electronic Cash Ledger (to be maintained on Government GST portal to pay GST)
Accounting entries under GST

- Mr. X purchased goods Rs. 1,00,000 locally (intrastate)
- He sold them for Rs. 1,50,000 in the same state
- He paid legal consultation fees Rs. 5,000
- He purchased furniture for his office for Rs. 12,000
1 | Purchase A/c ………………Dr. | 1,00,000 | |
Input CGST A/c ……………Dr. | 8,000 | ||
Input SGST A/c ……… …Dr. | 8,000 | ||
To Creditors A/c |
1,16,000
| ||
2 | 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 | ||
3 | Legal fees A/c ………..……Dr. | 5,000 | |
Input CGST A/c ……………Dr. | 400 | ||
Input SGST A/c ……………Dr. | 400 | ||
To Bank A/c | 5,800 | ||
4 | Furniture A/c ………..……Dr. | 12,000 | |
Input CGST A/c ……………Dr. | 960 | ||
Input SGST A/c ……………Dr. | 960 | ||
To ABC Furniture Shop A/c | 13,920 |
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
Therefore 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 | |
Output SGST A/c ……………Dr. | 12,000 | ||
To Input CGST A/c | 9,360 | ||
To Input SGST A/c | 9,360 | ||
To Electronic Cash Ledger A/c | 5,280 |
- Mr. X purchased goods Rs. 1,50,000 from outside the State
- He sold Rs. 1,50,000 locally
- He sold Rs.1,00,000 outside the state
- He paid telephone bill Rs. 5,000
- He purchased an air cooler for his office for Rs. 12,000 (locally)
1 | Purchase A/c ………………Dr. | 1,50,000 | |
Input IGST A/c ……………Dr. | 24,000 | ||
To Creditors A/c | 1,74,000 | ||
2 | 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 | ||
3 | Debtors A/c ………………Dr. | 1,16,000 | |
To Sales A/c | 1,00,000 | ||
To Output IGST A/c | 16,000 | ||
4 | Telephone Expenses A/c ..…Dr. | 5,000 | |
Input CGST A/c ………………..Dr. | 400 | ||
Input SGST A/c …..……………Dr. | 400 | ||
To Bank A/c | 5,800 | ||
5 | Office Equipment A/c.…..Dr. | 12,000 | |
Input CGST A/c ……………Dr. | 960 | ||
Input SGST A/c ……………Dr. | 960 | ||
To ABC Furniture Shop A/c | 13,920 |
Total CGST output =12,000
Total SGST input =400+960=1,360
Total SGST output =12,000
Total IGST input =24,000
Total IGST output =16,000
Particulars | CGST | SGST | IGST |
Output liability | 12,000 | 12,000 | 16,000 |
Less: Input tax credit | |||
CGST | 1,360 | ||
SGST | 1,360 | ||
IGST | 8,000 | 16,000 | |
Amount payable | 2,640 | 10,640 | NIL |
Any IGST credit will first be applied to set off 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 ………………Dr. | 9,360 | |
To Input CGST A/c | 1,360 | ||
To Input IGST A/c | 8,000 | ||
2 | Setoff against SGST output | ||
Output SGST ………………Dr. | 1,360 | ||
To Input SGST A/c | 1,360 | ||
3 | Setoff against IGST output | ||
Output IGST ………………Dr. | 16,000 | ||
To Input IGST A/c | 16,000 | ||
4 | Final payment | ||
Output CGST A/c ……………Dr. | 2,640 | ||
Output SGST A/c ……………Dr. | 10,640 | ||
To Electronic Cash Ledger A/c | 13,280 | ||
GST impact on financials
Profit & Loss Account
Particulars | Rs. | Particulars | Rs. |
Raw material consumption | XXX [Decrease] | Sales | XXX*** |
Purchases | XXX | ||
Depreciation | XXX | ||
Other Expenses | XXX |
GST will mean seamless input credits for intrastate and interstate purchases of goods. This will mean reduction in cost of raw materials as input GST can be setoff against the output GST payable on sales. Also GST paid on many services like legal consultation, audit fees, engineering consultation etc. can be setoff against output GST. Currently input credit of service tax paid cannot be adjusted against output excise/VAT.
All this will effectively bring down the expenses.
***Impact on sales may vary depending on the industry and the GST rates.
Particulars | Rs. | Particulars | Rs. |
Capital | XXX | Fixed assets | XXX [Decrease] |
Current liabilities | XXX | Current assets | XXX |
Tax payable | XXX | Credit receivable | XXX |
Tax payable and credit receivable will face changes too. There will be only three accounts under each of them- SGST, CGST, IGST instead of maintaining current excise payable, CENVAT credit, VAT payable, VAT credit, Service tax accounts.
GAAP is applicable mandatorily on GST. So, all principles following revenue recognition etc. will be applicable.
Every registered taxable person must keep and maintain books of account for five years from the due date of filing of Annual Return for the relevant year.
It is important that businesses plan to address changes arising out GST implementation in the best manner to reduce cost of transition and minimize business disruption.
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