Accounting Entries in GST, How to pass journal entries In GST: GST has superseded the multi-layered Indirect tax structure of India existing since a moon years ago which consisted of 17 taxes and 23 cesses levied by the Centre and the States. This was paramount to streamline the country’s $2-trillion economy and 1.3 billion people into a common market to give a push to ease of doing business in India. Here we provide Basic Journal Entries under GST Regime.

Accounting entries under GST, How to pass accounting entries In GST

GST Entries for Every Month

Sales

Purchase

Expenses

RCM

CLOSURE ENTRY TO BE PASSED ON THE LAST DAT OF MONTH

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

Example 1: Intra State (i.e Within State)

  • X purchased goods Rs. 1,00,000 locally (intrastate)He sold them for Rs. 1,50,000 in the same stateHe paid legal consultation fees Rs. 5,000He purchased furniture for his office for Rs. 12000

Assuming CGST @8% and SGST@8%

The entries will be-

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 (i.e from one state to another)

  • Mr. X purchased goods Rs. 1,50,000 from outside the StateHe sold Rs. 1,50,000 locallyHe sold Rs.1,00,000 outside the stateHe paid telephone bill Rs. 5,000He purchased an air cooler for his office for Rs. 12,000 (locally)

Any IGST credit will first be applied to setoff 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-

Rates taken of CGST, SGST and IGST are for illustrative purposes only. 

That’s all for Accounting Entries Under GST. Keep Sharing.

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