Journal Entries beneath GST (Items and Companies Tax)

The Items and Companies Tax or GST is a single, oblique tax that integrates all oblique taxes throughout the Indian financial system. GST is a destination-based consumption tax as it’s charged at each stage, wherever some worth is added to the products or providers, and the provider of the great or service offsets the cost on its inputs of the earlier levels. The cost is offset via the tax credit score mechanism. In the end, the final vendor passes on the added GST to the patron of the products or providers.

The three forms of taxes beneath GST are:

• Central Items and Companies Tax (CGST): GST levied by the Centre on the Intra-State provide of products or providers i.e provide of products and providers in the identical state.
• State Items and Companies Tax (SGST): GST levied by the State (together with Union Territories with legislatures) on the Intra-State provide (provide of products and providers in the identical state) of products or providers by the State.
• Built-in Items and Companies Tax (IGST): GST collected by the Centre and levied on the Inter-State provide of products or providers. In different phrases, IGST is the entire of CGST and SGST. 

Classification of GST for Accounting Functions:

1. Enter CGST/SGST: Enter CGST/SGST is paid on intra-state purchases of products and providers and adjusted towards Output CGST/SGST i.e. GST collected on gross sales.

2. Enter IGST: Enter IGST is paid on inter-state purchases of products and providers and adjusted towards Output IGST i.e. GST collected on gross sales.

3. Output CGST/SGST: Output CGST/SGST is collected on intra-state gross sales or provide of products and providers.

4. Output IGST:  Enter IGST is collected on inter-state gross sales or provide of products and providers.

Order of setting off of Enter GST:

Journal Entries (In case of Intra-state provide of products and providers i.e. gross sales throughout the similar state):

1. For buy of products:

2. On the market of products:

3. For buy return:

4. For gross sales return:

5. For buy of mounted property:

6. For bills paid:

7. For revenue obtained:

8. For items withdrawn by the proprietor for private use:

9. For items given away as free samples/lack of items by fireplace/theft:

10. For setting off Enter CGST towards Output CGST:

11. For setting off Enter SGST towards Output SGST:

12. For fee of GST:

Illustration:

Cross journal entries for the next transactions within the books of Sahil Ltd. assuming that each events belong to the identical state and CGST @6% and SGST @6% are levied:

1. Bought items for ₹1,80,000 from Akanksha & Co.

2. Offered items for ₹3,50,000 to Nupur Retailer.

3. Returned items to Akanksha & Co. for ₹20,000.

4. Nupur Retailer returned items for ₹16,000.

5. Paid for Printing and Stationary ₹10,000.

6. Items withdrawn by the proprietor for private use ₹40,000.

7. Items destroyed by fireplace ₹30,000.

8. Fee manufactured from steadiness of GST.

Answer:

Working Word:

Whole Enter CGST = 10,800 – 1,200 + 600 – 1,200 -900 = ₹6,000

Whole Enter SGST = 10,800 – 1,200 + 600 – 1,200 -900 = ₹6,000

Whole Enter CGST = 21,000 – 960 = ₹20,040

Whole Enter SGST = 21,000 – 960 = ₹20,040

Web CGST Paid = 20,040 – 6,000 = 14,040

Web SGST Paid = 20,040 – 6,000 = 14,040

Journal Entries (In case of Inter-state provide of products and providers i.e. gross sales from one state to a different state):

1. For buy of products:

2. On the market of products:

3. For buy return:

4. For gross sales return:

5. For buy of mounted property:

6. For bills paid:

7. For revenue obtained:

8. For setting off Enter IGST towards Output IGST:

9. If Enter IGST exceeds the Output IGST, Enter IGST will probably be first adjusted towards CGST, and the steadiness, if any, will probably be adjusted towards setting off SGST.

Illustration:

Cross journal entries for the next transactions within the books of Sahil Ltd. of Noida, Uttar Pradesh assuming CGST @6% and SGST @6% are levied:

1. Bought items for ₹6,00,000 from Sayeba & Co. of Patna, Bihar.

2. Bought items for ₹1,00,000 from Gaurav Retailer of Varanasi, Uttar Pradesh.

3. Offered items costing ₹1,60,000 to Ishika of Ranchi, Jharkhand at a revenue of 25% on value much less 10% Commerce Low cost.

4. Offered items costing ₹5,00,000 to Shubham of Allahabad, Uttar Pradesh at a revenue of 60% on value much less 15% Commerce Low cost towards cheque which was deposited into the financial institution.

5. Paid for Commercial ₹16,000.

6. Bought a pc for workplace use for ₹60,000 and fee was made by cheque.

7. Proprietor withdrew ₹20,000 for his private use.

8. Fee manufactured from the steadiness quantity of GST.

Answer: