Accounting Entries under GST

As GST is applicable from 1^st July 2017, every employee from accounts department of every business has confusion regarding passing journal entries under the GST regime. We have also researched on google and found that users googled for accounting entries under GST in case of Inter State Sales, Accounting entries under GST in case of Intra State Sales, How to pass setoff accounting entries under GST regime, How to adjust IGST, SGST & CGST and many more search terms. So we have decided to post an article regarding accounting entries Under GST.
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How to pass accounting entries under GST
Let us consider a few basic business transactions (all amounts excluding GST)
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Example 1: Intra-state (i.e within State)

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

Assuming CGST @8% and SGST@8%
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The entries will be-

1	Purchase A/c	Dr	1,00,000.00
	Input CGST A/c	Dr	8,000.00
	Input SGST A/c	Dr	8,000.00
	To Creditors A/c	Cr		1,16,000.00

2	Debtors A/c	Dr	1,74,000.00
	To Sales A/c	Cr		1,50,000.00
	To Output CGST A/c	Cr		12,000.00
	To Output SGST A/c	Cr		12,000.00

3	Legal fees A/c	Dr	5,000.00
	Input CGST A/c	Dr	400.00
	Input SGST A/c	Dr	400.00
	To Bank A/c	Cr		5,800.00

4	Furniture A/c	Dr	12,000.00
	Input CGST A/c	Cr	960.00
	Input SGST A/c	Cr	960.00
	To Ratti Ram & Garg Furniture Shop	Cr		13,920.00

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
Net CGST payable	= 12,000-9,360	=2,640
Net SGST payable	=12,000-9,360	=2,640

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5	Output CGST A/c	Dr	12,000.00
	Output SGST A/c	Dr	12,000.00
	To Input CGST A/c	Cr		9,360.00
	To Input SGST A/c	Cr		9,360.00
	To Electronic Cash Ledger A/c	Cr		5,280.00

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
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Example 2: Inter-state (i.e from one state to another)

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

Assuming CGST @8% and SGST@8%

1	Purchase A/c	Dr	1,50,000.00
	Input IGST A/c	Dr	24,000.00
	To Creditors A/c	Cr		1,74,000.00

2	Debtors A/c	Dr	1,74,000.00
	To Sales A/c	Cr		1,50,000.00
	To Output CGST A/c	Cr		12,000.00
	To Output SGST A/c	Cr		12,000.00

3	Debtors A/c	Dr	1,16,000.00
	To Sales A/c	Cr		1,00,000.00
	To Output IGST A/c	Cr		16,000.00

4	Legal fees A/c	Dr	5,000.00
	Input CGST A/c	Dr	400.00
	Input SGST A/c	Dr	400.00
	To Bank A/c	Cr		5,800.00

5	Furniture A/c	Dr	12,000.00
	Input CGST A/c	Cr	960.00
	Input SGST A/c	Cr	960.00
	To Ratti Ram & Garg Furniture Shop	Cr		13,920.00

Total Input CGST	= 400+960	= Rs. 1,360
Total Input SGST	= 12,000
Total output CGST	= 400+960	= Rs. 1,360
Total output SGST	= 12,000
Net CGST payable	= 24,000
Net SGST payable	=16,000

Particulars	CGST	SGST	IGST
Output Liability	12,000.00	12,000.00	16,000.00
Less: Input Tax Credit
CGST	1,360.00
SGST		1,360.00
IGST	8,000.00		16,000.00
Amount Payable	2,640.00	10,640.00	NIL

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Any IGST credit will first be applied to setoff IGST and then CGST. Balance if any will be applied to setoff SGST.
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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.
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SO THE SETOFF ENTRIES WILL BE-

	Setoff against CGST Output
1	Output CGST A/c	Dr	9,360.00
	To Input CGST A/c	Cr		1,360.00
	To Input IGST A/c	Cr		8,000.00

	Setoff against SGST Output
2	Output SGST A/c	Dr	1,360.00
	To Input SGST A/c	Cr		1,360.00

	Setoff against IGST Output
3	Output IGST A/c	Dr	16,000.00
	To Input IGST A/c	Cr		16,000.00
	Final Payment
4	Output CGST A/c		2,640.00
	Output SGST A/c		10,640.00
	To Electronic Cash Ledger A/c			13,280.00

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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Regards
ACA SOURAV BAGARIA

WELCOME TO CA GROUPS

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Tuesday 4 July 2017