GST in Brief and Accounting Entries

GST in Brief and Accounting Entries

  • Posted by SSdigitalBE
  • On July 15, 2018
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  • GST Accounting Entries

GST in Brief:

Particulars

Explanation

Who Should Register under GST 
  • Entities registered under the Pre-GST law (i.e., Excise/ VAT/Service Tax etc.)
  • Businesses with turnover above the threshold limit of Rs. 40 Lakhs
  • In case of inter state trade threshold limit is NIL
  • Those paying tax under the reverse charge mechanism
  • Person who supplies via e-commerce aggregator
  • Every e-commerce aggregator
GST Returns (Purpose, Due Date) 
  • GSTR-1: Outward supplies- if filled monthly than 11th of next month, if filled quarterly than upto next month from the end of quarter. 
  • GSTR-2: Inward supplies- 15th of next month (Filing currently suspended)
  • GSTR-3: Outward & Inward supplies- 20th of next month (Filling currently suspended)
  • GSTR-3B: Outward & Inward supplies, input credit, tax payment –  20th of next month
  • GSTR-4: Composition Scheme Quarterly – 18th of Next Month
  • GSTR-9: Annual Return- 31st Dec. of Next FY
  • GSTR-9A: Annual Return under Composition Scheme- 31st Dec. of Next FY
Interest on late deposit 18% PA on outstanding tax
Late Fee
  • Rs. 100 per day penalty for CSGT & SGST
  • No. Penalty for IGST
  • Maximum 5,000
E-way bill
  • Official shipping document that travels with a shipment, identifies its consignor, consignee, origin and destination, describes the goods and shows their weight and freight
  • Mandatory if consignment is of 50,000 or above
Composition Scheme
  • Intra State Sale Only
  • Turnover upto 1.50 Crore, for service provided it is 50 lacs only
  • Can’t claim input credit
  • GST charged by Composite dealer can’t be availed as input credit
  • Rates: Trade & Manufacturer -1%, Restaurant- 5%, Service Provider- 6%
Reverse Charge Mechanism
  • Goods Transport Agency
  • Legal Services
  • Sponsorship Services
  • Director of a company
  • Unregistered Supplier- delayed

Accounting Entries

Ledger Accounts under GST:

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

Accounting entries under GST

Let us consider a few basic business transactions (all amounts excluding GST)-

Example 1: Intra-state

  1. Mr. X purchased goods Rs. 1,00,000 locally (intrastate)
  2. He sold them for Rs. 1,50,000 in the same state
  3. He paid legal consultation fees Rs. 5,000
  4. He purchased furniture for his office for Rs. 12,000

Assuming CGST @8% and SGST@8%

The entries will be-

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 Bank A/c 5,280

Thus due to input tax credit, tax liability of Rs. 24,000 is reduced to only Rs.5,280.

If there had been any input tax credit left it would have been carried forward to the next year.

Example 2: Inter-state

  1. Mr. X purchased goods Rs. 1,50,000 from outside the State
  2. He sold Rs. 1,50,000 locally
  3. He sold Rs.1,00,000 outside the state
  4. He paid telephone bill Rs. 5,000
  5. He purchased an air cooler for his office for Rs. 12,000 (locally)

Assuming CGST @8% and SGST@8%

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 input =400+960=1,360

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 Bank A/c 13,280