Accounting Entries Under GST
Accounting Entries Under GST
Accounting Entries Under GST
Under GST all these taxes (excise, VAT, service tax) will get subsumed into one
account.
The trader has to then maintain the following a/c (apart from accounts like
purchase, sales, stock) –
.
While the number of accounts is more apparently, once you go through the
accounting you will find it is much easier for record keeping. One of the biggest
advantages X will have is that he can setoff his input tax on service with his output
tax on sale.
Let us consider a few basic business transactions (all amounts excluding GST)-
Example 1: Intra-state
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
CGST 1,360
SGST 1,360
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-
4 Final payment