GST Journal Entry - GST Receivable And Payable Journal Entry
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Table of Contents
- Benefits of GST Entries:
- Before GST:
- GST Accounting:
- Basic Idea of GST:
- GST Accounts:
- Understanding GST Entries through Examples:
- Impact of GST on Financial Statements
- Impact of GST on Fixed Assets:
- Record Keeping Requirements for GST:
- Who Needs to Keep Records?
- What Records are Needed?
- Benefits of Proper Record Keeping:
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India implemented Goods and Services Tax (GST) in July 2017.
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GST aims to simplify business processes and tax filing with easier rules and clear entries.
Benefits of GST Entries:
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GST entries are categorized for different transactions (imports, refunds, sales, purchases).
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This makes it easier to understand business transactions compared to the previous system.
Before GST:
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Multiple taxes like excise, VAT, CST, and service tax existed.
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Each tax required separate accounts, making accounting complex.
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Input tax credit couldn't be claimed for both central and state taxes.
GST Accounting:
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GST replaces many previous tax laws, simplifying account management.
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Fewer ledger accounts are needed under GST compared to the pre-GST era.
Basic Idea of GST:
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GST is an indirect tax applied to the supply of goods and services.
GST Accounts:
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Businesses need to maintain specific accounts under GST, including:
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CGST (Central GST) accounts (Input and Output)
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SGST (State GST) accounts (Input and Output)
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IGST (Integrated GST) accounts (Input and Output)
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e-Cash Ledger (maintained on GST portal for tax payments)
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Understanding GST Entries through Examples:
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We will explore real-life business transactions to understand how GST entries work.
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This will clarify concepts like e-way bill and GST recording in accounting.
Sample Transactions:
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Mr. A purchased goods (10,000 INR) and sold them (30,000 INR) within the same region.
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He paid a consultation fee (500 INR) and bought furniture (10,000 INR) for business expansion.
Taking CGST @ 8% and SGST @ 8% GST Accounting entries: The accounting Journal entries with GST will be:
| S. No | Details | Debit | Credit |
| 1 | Purchase A / c Dr | 10,000 | |
| CGST Input Dr | 800 | ||
| SGST Input Dr | 800 | ||
| To Creditors A / c (Purchase journal entry with GST) | 11,600 | ||
| 2 | Debtors A/c Dr | 34,800 | |
| To Sales A / c | 30,000 | ||
| To Output CGST A/c | 2,400 | ||
| To Output SGST A/c(sales entry with GST) | 2,400 | ||
| 3 | Consultation fee A / c Drs | 500 | |
| CGST Input Dr | 40 | ||
| Input SGST Dr | 40 | ||
| To Bank A / c | 580 | ||
| 4 | Furniture A / c Dr | 10,000 | |
| CGST Input A/c Dr | 800 | ||
| SGST Input A/C Dr | 800 | ||
| To ABC furniture A/c | 11,600 |
By GST Entry in Tally we get, 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 SGST output = 2,400 INR Therefore, NET CGST to be paid = 2,400 - 1,640 = 760 INR NET SGST to be paid = 2,400 - 1,640 = 760 INR
Impact of GST on Financial Statements
Let's understand the impact of GST on the financial statements Profit and Loss Statement and what is GST in accounting.
| Details | Price (INR) | Details | Price (INR) |
| Raw material | XXXX | Sales | XXXX |
| Purchases | XXXX | ||
| Depreciation | XXXX | ||
| Other costs | XXXX |
You will experience a decrease in the cost of raw materials, purchases, and other costs since the taxpayer can avail ITC on these expenses in GST return.
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 |
Impact of GST on Fixed Assets:
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GST allows businesses to claim tax credit (ITC) on purchases related to fixed assets, potentially reducing their cost.
Record Keeping Requirements for GST:
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The government outlines specific record-keeping rules for businesses under GST.
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These rules ensure proper documentation of business transactions.
Who Needs to Keep Records?
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Businesses involved in storing, carrying, or supplying goods and services must maintain records.
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Records should be centralized unless the business operates from multiple locations.
What Records are Needed?
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Details about goods (production, purchase, sale, storage, movement)
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Supplier and buyer information
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Inventory value
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Input tax credit claimed
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Export tax paid
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GST payments made
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Any other government-mandated records
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Import/export details
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GST entries (payable & receivable)
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Documents like invoices, bills, challans, vouchers, and e-way bills
Benefits of Proper Record Keeping:
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Ensures compliance with tax regulations
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Enables accurate financial reporting
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Helps track GST liabilities
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Simplifies tax filing
Conclusion:
Understanding how to record GST transactions is crucial for businesses. Maintaining proper records helps with tax compliance, financial reporting, and managing GST liabilities effectively.
GST By Name | Indian GST Calculator | GST Verification Search Tool | GST Status Check | HSN Code Finder
Frequently Asked Questions
Which accounts are must be maintained under gst?
You must maintain several accounts under GST like input supplies, output supplies, production, input credit, output tax, stock, and import-export.
What is the journal entry for the sale of taxable goods within the state?
A journal entry for sales tax can be understood as a debit to the accounts receivable for an exact amount of the invoice or cash received. Furthermore, it is a credit to the sales account and sales tax payable account for the exact same amount of sale taxes levied.
What is the journal entry for gst?
The journal entry for GST depends on the specific type of transaction. Here's a breakdown of common GST transactions and their corresponding journal entries:
Purchase with GST (Intra-state):
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Debit: Purchases A/c (amount excluding GST)
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Debit: Input CGST A/c (CGST amount)
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Debit: Input SGST A/c (SGST amount)
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Credit: Cash/Bank A/c (total amount including GST)
Sale with GST (Intra-state):
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Debit: Cash/Bank A/c (amount excluding GST)
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Credit: Sales A/c (amount excluding GST)
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Credit: Output CGST A/c (CGST amount)
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Credit: Output SGST A/c (SGST amount)
Purchase with GST (Inter-state):
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Debit: Purchases A/c (amount excluding GST)
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Debit: Input IGST A/c (IGST amount)
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Credit: Cash/Bank A/c (total amount including GST)
Sale with GST (Inter-state):
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Debit: Cash/Bank A/c (amount excluding GST)
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Credit: Sales A/c (amount excluding GST)
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Credit: Output IGST A/c (IGST amount)
How do you do GST accounting entries?
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GST accounting requires maintaining separate accounts for different tax components:
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CGST (Central GST): Tracks Central tax for intra-state transactions. (Input & Output)
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SGST (State GST): Tracks State tax for intra-state transactions. (Input & Output)
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IGST (Integrated GST): Tracks Integrated tax for inter-state transactions. (Input & Output)
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What are some common GST journal entry examples?
There are different journal entries for various GST transactions. Here are two common examples:
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Purchase of goods within the same state (intra-state):
Debit: Purchases A/c (amount excluding GST) Debit: Input CGST A/c (CGST amount) Debit: Input SGST A/c (SGST amount) Credit: Cash/Bank A/c (total amount including GST)
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Sale of goods within the same state (intra-state):
Debit: Cash/Bank A/c (amount excluding GST) Credit: Sales A/c (amount excluding GST) Credit: Output CGST A/c (CGST amount) Credit: Output SGST A/c (SGST amount)
These are simplified examples. Remember, CGST and SGST rates may vary, and there might be additional entries for specific situations.
What information do I need for a purchase entry with GST?
When recording a purchase entry with GST, you'll need the following details:
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Purchase amount (excluding GST): This is the actual cost of the goods or services before adding the tax.
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GST rate: This depends on the type of goods or services purchased and your location.
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CGST/SGST/IGST amount (depending on purchase type):
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Intra-state purchase (within the same state): You'll need both CGST and SGST amounts.
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Inter-state purchase (between states): You'll need the IGST amount.
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Supplier details: Name and GST number of the supplier.
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Invoice details: Invoice number and date.
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