Accounting Treatment of GST in India



Before coming of GST Law 2016, as business persons, we were focused to do accounting treatment of Excise, VAT and service tax separately. Now, all these three tax have merged into one indirect taxation system. So, we need to keep accounting records for different tax separately. We will now keep consolidated accounting information and we are ready to show how much our total tax liability of goods and services which we have provided to others which we already received from our customers.

Remember Don't 

Some accountants are old and after coming GST, they have to leave the following habit of recording.

1. Don't pass the entry of Service tax. Don't open service tax account. Don't show service tax in bill register, receipt register, debit/credit notes register, Cenvat credit register. If you have received service tax from customer, you have to pass the GST entry and open GST account.

2. Don't pass Excise entries. Don't record excise duty through daily stock account register of excisable goods, register of receipt and issue of raw material, invoice book and job work register. Only pass the GST entries and keep GST record for material supplies or supplies inward.

3. Don't pass the VAT entries in the form of input VAT and Output VAT for buying and selling of Goods. Don't make record of purchase and Sales with VAT. Only GST will be recorded with purchase and sales.

4. No need of following Account in your books. 

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

Following Records will be kept

Now, Every business will have registration certificate for stock's outward supply and inward supply and it will be his principle place. If business is done more than one place, each place of business account will maintained differently for accounting records of GST.

1. GST Record on supplies of goods and services inward for manufacturing of goods.
2. GST on Inward and outward supplies of goods and services for trading
3. Input Tax Credit of GST
4. Output GST Payable and paid

Following account will open

Input CGST a/c
Output CGST a/c
Input SGST a/c
Output SGST a/c
Input IGST a/c
Output IGST a/c

Example of Accounting Treatment of GST in India 

Intra-state Transactions ( Buyer and Seller in Same State) 

Mr. A buy goods of Rs. 2,00,000 from Mr. C
Mr. A sold goods to Mr. B Rs. 1,40,000
He paid Internet Bill of Rs. 2000
GST is 18% which is divided equal to CGST 9% and 9% SGST


1. Journal Entry of Purchase with GST 

Purchase A/c Dr. 2,00,000
Input CGST A/c Dr.    18,000
Input SGST A/c Dr.    18,000
Mr. C (Creditor) A/c Cr. 2,36,000

2. Journal Entries of Sale with GST


Mr. B (Debtor) A/c Dr. 1,65,200
             Sales A/c Cr. 1,40,000
             Output CGST A/c Cr. 12,600
            Output SGST A/c Cr. 12,600

3. Journal Entries for Taken Service Expenses with GST

Internet Expenses A/c Dr. 2,000
Input CGST A/c Dr. 180
Input SGST A/c Dr. 180
          Bank A/c Cr. 2,360


Total Input CGST=18,000+180 = Rs. 18,180
Total Input SGST=18,000+180 = Rs. 18,180
Total output CGST=12,600
Total output SGST=12,600
Therefore Net CGST Receivable=18,180-12600=5580
Net SGST Receivable=18180-12600= 5580

4. Net Balance of GST Paid or Received 


Cash Electronic ledger A/c ( Balance figure)  Dr. 11160
( Received amount through GST Portal)
Output CGST A/c Dr. 12,600
Output SGST A/c  Dr. 12,600
          Input CGST A/c Cr. 18180
        Input SGST A/c Cr. 18180

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Accounting Education: Accounting Treatment of GST in India
Accounting Treatment of GST in India
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