GST Accounting Entries for Interstate, Intrastate, Imported Goods Asset

GST Accounting Entries for Interstate, Intrastate, Imported Goods Asset

GST Accounting Entries: The goods and services tax which is also known as GST has replaced the majority of indirect taxes. It has resulted in the “One Nation, One Tax” system. In comparison to the previous VAT and excise systems, GST accounting is simpler.

However, GST accounting entries in the books of accounts must be understood and passed on a regular basis. Thus any individual who has done GST registration online and falls under registered taxable person is required to preserve and maintain books of account for five years. It’s important to confirm that there are few or no discrepancies between the books of accounts and GST returns like GSTR-1, GSTR-2B, and GSTR-3B. It would also help in the proper and timely reconciliation of yearly accounts in preparation for GSTR-9 filing for the financial year. In this article, let’s understand everything about Accounting entries under GST in detail.

VAT and Excise Accounting

Earlier Excise, VAT, CST, and service tax all required their own set of accounts. And also the input tax credit could not be claimed for taxes set by the central government and taxes levied by the states. As a result, multiple ledger accounts were required.

To overcome this, GST was introduced. GST has been able to eliminate the requirement for several ledger accounts, reducing the number to just a few. Apart from accounts like purchase, sales, and stock, here’s a list of the few ledger accounts that businesses required to keep under the previous regime:

  1. Excise Payable A/C (for manufacturers)
  2. CENVAT credit A/C (for manufacturers)
  3. Output VAT A/C
  4. Input VAT A/C
  5. Input Service Tax A/C
  6. Output Service tax A/C

Accounting Under GST Regime

Indirect taxes such as excise, VAT, and service tax, are now combined into a single account under GST. Now let’s consider Mr X is a person who is a trader, then he will have to keep the following accounts expect Purchase details, Sales and Stocks for each GST Identification Number (GSTIN):

  • Input Cess A/C
  • Input CGST A/C
  • Input IGST A/C
  • Input SGST A/C
  • Output Cess A/C
  • Output CGST A/C
  • Output IGST A/C
  • Output SGST A/C
  • Electronic Cash Ledger (to be kept up to date on the government’s GST portal in order to deposit and pay GST in cash)

How To Pass Accounting Entries Under GST?

Let’s understand how to pass GST accounting entries with the help of examples.

GST Accounting Entries for Intrastate Transactions

The GST accounting entries for intrastate transactions represent the transactions within the state. Let’s understand how to pass accounting entries under GST under Intrastate transactions within an example.

  • Mr. A spent Rs. 2,00,000 on local purchases (intrastate).
  • In the same state, he sold them for Rs. 3,00,000.
  • He paid Rs. 10,000 in legal consulting fees.
  • He spent Rs. 40,000 on furniture for his office from XYZ Furniture (assuming CGST of 8% and SGST of 8%).
Details Debit (Amount in Rupees) Credit (Amount in Rupees)
Purchase A/C Dr.  300,000
Input IGST A/C Dr.  48,000
           To Creditors A/C  348,000
Debtors A/C Dr.  348,000
             To Sales A/C  300,000
             To Output CGST A/C  24,000
             To Output SGST A/C  24,000
Debtors A/C Dr.  232,000
             To Sales A/C  200,000
             To Output IGST A/C  32,000
Telephone Expenses A/C ..Dr.  10,000
Input CGST A/C ..Dr.  800
Input SGST A/C ..Dr.  800
             To Bank A/C  11,600
Office Equipment A/C…Dr.  24,000
Input CGST A/C Dr.  1,920
Input SGST A/C Dr.  1,920
             To ABC Furniture Shop A/C  27,840
Setoff against CGST output
Output CGST Dr. 18,720
           To Input CGST A/C 2,720
           To Input IGST A/C 16,000
Setoff against SGST output
Output SGST Dr. 2,720
           To Input SGST A/C 2,720
Setoff against IGST output
Output IGST Dr. 32,000
           To Input IGST A/C 32,000
Final payment
Output CGST A/C Dr. 5,280
Output SGST A/C Dr. 21,280
             To Electronic Cash Ledger A/C 26,560
1047440 1047440
  • CGST = 16,000+800+3,200 = Rs. 20,000 Total Input
  • SGST = 16,000+800+3,200 = Rs. 20,000 Total Input
  • CGST total output = 24,000
  • SGST total output = 24,000
  • As a result, the net CGST payment is 24,000-20,000 = 4,000.
  • SGST payable net = 24,000 – 20,000 = 4,000
  • Thus, Rs. 48,000 output liability has been balanced by an Rs. 40,000 input tax credit.
  • As a result, the CGST net tax liability is Rs. 4,000 and the SGST net tax liability is Rs. 4,000.

GST Accounting Entries for Inter-State Transactions

Mr. X bought products worth Rs. 3,00,000 from outside the country. He made a local sale for Rs. 3,00,000. He made a profit of Rs.2,00,000 outside of the state. He paid his Rs. 10,000 phone charge. He paid Rs. 24,000 (locally) for an air conditioner for his office, assuming CGST of 8% and SGST of 8%.

Particulars Debit Amount in Rupees Credit Amount in Rupees
Purchase A/C Dr.  300,000
Input IGST A/C Dr.  48,000
           To Creditors A/C  348,000
Debtors A/C Dr.  348,000
             To Sales A/C  300,000
             To Output CGST A/C  24,000
             To Output SGST A/C  24,000
Debtors A/C Dr.  232,000
             To Sales A/C  200,000
             To Output IGST A/C  32,000
Telephone Expenses A/C ..Dr.  10,000
Input CGST A/C ..Dr.  800
Input SGST A/C ..Dr.  800
             To Bank A/C  11,600
Office Equipment A/C…Dr.  24,000
Input CGST A/C Dr.  1,920
Input SGST A/C Dr.  1,920
             To ABC Furniture Shop A/C  27,840
Setoff against CGST output
Output CGST Dr. 18,720
           To Input CGST A/C 2,720
           To Input IGST A/C 16,000
Setoff against SGST output
Output SGST Dr. 2,720
           To Input SGST A/C 2,720
Setoff against IGST output
Output IGST Dr. 32,000
           To Input IGST A/C 32,000
Final payment
Output CGST A/C Dr. 5,280
Output SGST A/C Dr. 21,280
             To Electronic Cash Ledger A/C 26,560
1047440 1047440
  • CGST input total =800+1920=2,720
  • CGST output total = 24,000
  • SGST input total =800+1920=2,720
  • SGST output total = 24,000
  • Input of IGST numbers 48,000
  • IGST output total = 32,000

Any IGST credit will be used to balance IGST first, then CGST. So, out of the entire input IGST of Rs. 48,000, it will first be set off totally against IGST. Then deduct Rs.16,000 from the total to account for CGST. Only Rs. 26,560 of the total liability of Rs. 80,000 is payable.

Particulars CGST SGST IGST
Output liability 24,000 24,000 32,000
Less: Input tax credit
   CGST (Telephone+Office) 2,720
   SGST (Telephone+Office) 2,720
   IGST 16,000 32,000
Amount payable 5,280 21,280 NIL

Entry for Purchase of Goods under GST

The example of booking input under GST is explained below:

Sr. No. Particulars Debit Amount in Rupees Credit Amount in Rupees
If purchases are made within the state (Intra State)
1 Purchase A/C Dr.  200,000
Input CGST A/C Dr.  16,000
Input SGST A/C …Dr.  16,000
              To Creditors or Cash BankA/C  232,000
If purchases are made from other states (Inter-State)
2 Purchase A/C Dr.  300,000
Input IGST A/C Dr.  48,000
              To Creditors or Cash BankA/C  348,000
If purchases are  made from Outside India (Import)
3 Purchase A/C Dr.  200,000
Input IGST A/C Dr.  32,000
              To Creditors or Cash BankA/C  200,000
              To IGST Payable A/C.  32,000
(Reverse charge mechanism applies here)

Entry for Sale of Goods

The example of booking Output liability under GST is explained below:

Sr. No. Particulars Debit Amount in Rupees Credit Amount in Rupees
If Sales are made within the state (Intra State) 
1 Debtors  A/C.or Cash/Bank  A/C.–Dr 216,000
To Sales  A/C. ————— Cr.  200,000
To Output CGST  A/C. —– Cr.  16,000
To Output SGST  A/C.  —– Cr.  16,000
If sales are made from other states (Inter-State) 
2 Debtors  A/C.or Cash/Bank  A/C.–Dr 232,000
To Sales  A/C. ————— Cr.  200,000
To Output IGST  A/C. —– Cr.  32,000
If sales are made outside the Country (Export) 
3 Debtors  A/C. or Cash/Bank  A/C. -Dr. 200,000
To Sales (Export)  A/C. ————-Cr.  200,000
(Export sale is Exempt)

Example of GST Entry for Expenditure Incurred for Business Purpose

Sr. No. Particulars Debit Amount in Rupees
Credit Amount in Rupees
If any expenditures are incurred within the state (Intra State)
1 Expenditure  A/C Dr.  200,000
Input CGST A/C Dr.  16,000
Input SGST A/C …Dr.  16,000
              To Creditors or Cash BankA/C  232,000
If expenditures are incurred from other states (Inter-State)
2 Expenditure  A/C Dr.  300,000
Input IGST A/C Dr.  48,000
              To Creditors or Cash BankA/C  348,000
If expenditures are incurred from Outside India (Import)
3 Expenditure  A/C Dr.  200,000
Input IGST A/C Dr.  32,000
              To Creditors or Cash BankA/C  200,000
              To IGST Payable A/C.  32,000
(Reverse charge mechanism applies here)

Examples Of GST Entry for Purchase Of Asset

Sr. No. Particulars Debit Amount in Rupees Credit Amount in Rupees
If an asset is purchased within the state
1 Asset  A/C Dr.  200,000
Input CGST A/C Dr.  16,000
Input SGST A/C …Dr.  16,000
              To Creditors or Cash BankA/C  232,000
If an asset is purchased from other states (Inter-State)
2 Asset  A/C Dr.  300,000
Input IGST A/C Dr.  48,000
              To Creditors or Cash BankA/C  348,000
If an asset is purchased  from another Country  (Import)
3 Asset  A/C Dr.  200,000
Input IGST A/C Dr.  32,000
              To Creditors or Cash BankA/C  200,000
              To IGST Payable A/C.  32,000
(Reverse charge mechanism applies here)

Entry for Set Off & Payment GST

To set off & Payment Output SGST 

Output SGST A/C. ——Dr.

To Input SGST A/C. ——Cr.

To Input IGST A/C.** ——- Cr.

To Electronic Cash ledger A/C. ——Cr.

(** Input IGST credit is allowed for setting off Output SGST liability. But after setting of Output IGST liability, Output CGST liability. )

To set off & Payment Output CGST 

Output CGST A/C. ——Dr.

To Input CGST A/C. —– Cr.

To Input IGST A/C.** ——- Cr.

To Electronic Cash ledger A/C. ——Cr.

(** Input IGST credit is allowed for setting off Output CGST liability. But after setting Output IGST liability. )

To set off & Payment Output IGST 

Output IGST A/C. ——Dr.

To Input IGST A/C. —– Cr.

To Electronic Cash ledger A/C. —– Cr.

GST Entry When GST TDS has been Deducted along with Income Tax TDS

To book Income (In case of Intrastate Transaction)

Debtor/Cash A/c. ———-Dr.

Income Tax TDS A/c. ——Dr.

CGST TDS A/c.  ————-Dr.

SGST TDS A/c.   ————-Dr.

To Income A/c. ————-Cr.

To CGST A/c.  —————Cr.

To SGST A/c.  —————Cr.

To book Income (In case of Interstate Transaction)

Debtor/Cash A/c. ———-Dr.

Income Tax TDS A/c. ——Dr.

IGST TDS A/c.  ————-Dr.

To Income A/c. ————-Cr.

To IGST A/c.  —————Cr.

Period of Retention of Accounts

From the due date of submitting the Annual Return for the relevant year, every registered taxable person is required to preserve and maintain books of account for five years. The taxpayer must reconcile his or her books of accounts with the GST returns filed during the financial year at the end of the fiscal year. Any differences discovered when comparing data between books and GST returns must be corrected in books or disclosed in subsequent GST returns.

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