IJournals: International Journal of Social Relevance & Concern

ISSN-2347-9698
Volume 5 Issue 9 September 2017

Accounting Entries under GST Regime: A

Descriptive study
Author : Nurul Hoda
MIT, Pune, India
Co-Author: Nargish Bano
IASE, Jamia Millia Islamia, New Delhi, India
Address – WBSEDCL, Quarter no F- 24, Power House Complex,
2nd mile, Sevoke road, Opp- Cosmos Mall, Siliguri, Darjeeling, West Bengal, India, PIN - 734 001,
Mob- 9831500499
Email – saniakainat@gmail.com

ABSTRACT:
The aim of this study is to discuss the different types of business transactions related to Goods and Services
Taxand its accounting treatment in the books of accounts.In this study the focus is on the accounting treatment
of the different elements involved in GST related transactions. GST is a single national and uniform tax
system levied across India on all goods and services except some exemptions. All the people who are wise
and paying tax are quite happy with this tax system. But those who were not paying tax then this can be a sad
story for them. But at all everyone needs to celebrate this new tax reform.

KEY WORDS: Goods and Services Tax (GST), Accounting, Journal, Ledger, Entry

INTRODUCTION:
Goods and service tax or GST has subsumed all the indirect taxes. It is aimed to bring in “One nation one tax”
regime. While there are certain initial transition challenges, GST is assumed to bring in much clarity in many
areas of business. One of the areas is accounting and bookkeeping of the GST related transactions.
Pre-GST scenario:
During the older mechanism of Indirect Taxes Separate accounts have to be maintained for excise, VAT, CST
and service tax. Here’s a list of the few accounts previously any business entity has to maintain (apart from
accounts like purchase, sales, stock) –
 Excise payable a/c (In case of manufacturers)
 CENVAT credit a/c (In case of manufacturers)
 Output VAT a/c
 Input VAT a/c
 Input Service tax a/c
 Output Service tax a/c
 Output VAT a/c
 Input VAT a/c
 CST A/c (for inter-state sales and purchases)
 Service tax a/c [It cannot be claimed as input tax credit with output VAT. Service tax cannot be set-off
against VAT/ CST]
Post GST Regime scenario:
In the GST regime, a taxpayer is required to maintain books of accounts and records related to GST transactions
to provide a true and fair view of the financial transactions and consider their impact on the financial statement of
the organization. The books are required to record the input supplies, output supplies, production, input credit,
output tax, Stock, Import-export, reverse charge etc.
Ledger Accounts to be Kept Under GST:

Cite: Nurul Hoda, Nargish Bano, vol 5 issue 9, pp 1-7, September 2017
 IJournals: International Journal of Social Relevance & Concern
ISSN-2347-9698
Volume 5 Issue 9 September 2017
Under the GST regime, all indirect taxes have been subsumed in GST and there are dual GST Structure based on
intra-state supplies and inter-state supplies. The CGST and SGST are charged on intra-state supplies whereas the
IGST (Integrated Goods and Services Tax) are charged on all inter-state supplies. A trader (Be they are Supplier
or Service provider/ receiver in case of reverse charge mechanism) has to now maintain the following ledger a/c
(apart from accounts like purchase, sales, stock) –
 Input CGST a/c
 Output CGST a/c
 Input SGST a/c
 Output SGST a/c
 Input IGST a/c
 Output IGST a/c
 Electronic Cash Ledger (It is to be maintained on Government GST portal to pay GST)
It is very much clear that the number of accounts is more apparently and it is much easier for record keeping in
accounting. It is very much important as set-off input tax on service can be claimed with output tax on sale.
Illustrations for GST Entries in the Books of accounts:
Accounting Entries for Intra state Transactions (i.e. within the State)
Mr. X purchased goods for ` 2,00,000 locally (intrastate). He sold them for ` 3,00,000 in the same state. He paid
legal consultation fees ` 10,000. He purchased furniture for his office for `40,000from ABCFurniture(Assuming
CGST @8% and SGST@8%)

Sr. Dr. Cr.

Particulars
No. ` `
Purchase A/c ………………Dr. 200,000.00
Input CGST A/c ……………Dr. 16,000.00
1
Input SGST A/c ……………Dr. 16,000.00
To Creditors A/c 232,000.00
Debtors A/c ………………Dr. 348,000.00
To Sales A/c 300,000.00
2
To Output CGST A/c 24,000.00
To Output SGST A/c 24,000.00
Legal fees A/c ……….……Dr. 10,000.00
Input CGST A/c ……………Dr. 800.00
3
Input SGST A/c ……………Dr. 800.00
To Bank A/c 11,600.00
Furniture A/c ……….……Dr. 40,000.00
Input CGST A/c ……………Dr. 3,200.00
4
Input SGST A/c ……………Dr. 3,200.00
To ABCFurniture A/c 46,400.00
Output CGST A/c ……………Dr. 24,000.00
Output SGST A/c ……………Dr. 24,000.00
5 To Input CGST A/c 20,000.00
To Input SGST A/c 20,000.00
To Electronic Cash Ledger A/c 8,000.00
Total 686,000.00 686,000.00
Total Input CGST = 16,000+800+3,200 = ` 20,000
Total Input SGST = 16,000+800+3,200 = ` 20,000
Total output CGST = ` 24,000
Total output SGST = ` 24,000
Therefore Net CGST payable = `24,000-20,000 = ` 4,000&Net SGST payable = ` 24,000-
20,000 = ` 4,000
Thus, Output liability of ` 48,000 has been adjusted with Input tax credit of ` 40,000. So, net tax liability of

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 IJournals: International Journal of Social Relevance & Concern
ISSN-2347-9698
Volume 5 Issue 9 September 2017
CGST is ` 4,000 and SGST ` 4,000
GST Accounting Entries for Inter- state transactions (i.e Outside the State)
Mr. X purchased goods for ` 3,00,000 from outside the State. He sold ` 3,00,000 locally. He sold ` 2,00,000
outside the state. He paid telephone bill ` 10,000. He purchased an A/C for his office for ` 24,000
(locally)Assuming CGST @8% and SGST@8%.
Sr. Dr. Cr.
Particulars
No. ` `
Purchase A/c ………………Dr. 300,000.00
1 Input IGST A/c ……………Dr. 48,000.00
To Creditors A/c 348,000.00
Debtors A/c ………………Dr. 348,000.00
To Sales A/c 300,000.00
2
To Output CGST A/c 24,000.00
To Output SGST A/c 24,000.00
Debtors A/c ………………Dr. 232,000.00
3 To Sales A/c 200,000.00
To Output IGST A/c 32,000.00
Telephone Expenses A/c.…Dr. 10,000.00
Input CGST A/c ………………..Dr. 800.00
4
Input SGST A/c …..……………Dr. 800.00
To Bank A/c 11,600.00
Office Equipment A/c.…..Dr. 24,000.00
Input CGST A/c ……………Dr. 1,920.00
5
Input SGST A/c ……………Dr. 1,920.00
To ABC Furniture Shop A/c 27,840.00
Set-off against CGST output
Output CGST ………………Dr. 18,720
1
To Input CGST A/c 2,720
To Input IGST A/c 16,000
Set-off against SGST output
2 Output SGST ………………Dr. 2,720
To Input SGST A/c 2,720
Set-off against IGST output
3 Output IGST ………………Dr. 32,000
To Input IGST A/c 32,000
Final payment of GST
Output CGST A/c ……………Dr. 5,280
4
Output SGST A/c ……………Dr. 21,280

To Electronic Cash Ledger A/c 26,560

Total 10,47,440 10,47,440

TotalCGST input =800+1,920=` 2,720
Total CGST output =` 24,000
Total SGST input =800+1,920=` 2,720
Total SGST output =` 24,000
Total IGST input =` 48,000
Total IGST output =` 32,000

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 IJournals: International Journal of Social Relevance & Concern
ISSN-2347-9698
Volume 5 Issue 9 September 2017
Note:Any IGST credit will first be applied to set off IGST and then CGST. So out of total input IGST of `
48,000, firstly it will be completely setoff against IGST. Then balance ` 16,000 against CGST. From the total
liability ` 80,000, only ` 26,560 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
Journal Entry for Purchase of Goods or Services under GST :
Sr. No. Particulars Dr. Cr.
` `
1. When purchases are made within the state.
Purchase A/c ………………Dr. 200,000.00
Input CGST A/c ……………Dr. 16,000.00
Input SGST A/c ……………Dr. 16,000.00
To Creditors or BankA/c 232,000.00
2. When purchases are made from other state
Purchase A/c ………………Dr. 300,000.00
Input IGST A/c ……………Dr. 48,000.00
To Creditors or BankA/c 348,000.00
3. When purchases are made from Outside India (Import)
Purchase A/c ………………Dr. 200,000.00
Input IGST A/c ……………Dr. 32,000.00
To Creditors or BankA/c 200,000.00
To IGST Payable A/c. 32,000.00
(Reverse charge mechanism applies here)
Journal entry for Sale of Goods or Servicesunder GST:
Sr. No. Particulars Dr. Cr.
` `
1. When Sales are made within the state
Debtors A/c. or Bank A/c….Dr. 216,000.00
To Sales A/c. ……………. Cr. 200,000.00
To Output CGST A/c. …… Cr. 16,000.00
To Output SGST A/c. …… Cr. 16,000.00
2. When sales are made from other state
Debtors A/c.or Bank A/c….Dr. 232,000.00
To Sales A/c. ……………. Cr. 200,000.00
To Output IGST A/c. ……. Cr. 32,000.00
3. When sales are made outside the Country (Export)
Debtors A/c. or Cash/Bank A/c. ...Dr. 200,000.00
To Sales (Export) A/c. …………Cr. 200,000.00

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 IJournals: International Journal of Social Relevance & Concern
ISSN-2347-9698
Volume 5 Issue 9 September 2017
(Export sale is Exempt under GST)
Journal entry for expenditure incurred for business purpose under GST
Sr. No. Particulars Dr. Cr.
` `
1. When any expenditure are incurred within the state
Expenditure A/c ………………Dr. 200,000.00
Input CGST A/c ……………Dr. 16,000.00
Input SGST A/c ……………Dr. 16,000.00
To Creditors or BankA/c 232,000.00
2. When expenditure are incurred from other state
Expenditure A/c ………………Dr. 300,000.00
Input IGST A/c ……………Dr. 48,000.00
To Creditors or BankA/c 348,000.00
3. When expenditure are incurred Outside India
Expenditure A/c ………………Dr. 200,000.00
Input IGST A/c ……………Dr. 32,000.00
To Creditors or BankA/c 200,000.00
To IGST Payable A/c. 32,000.00
(Reverse charge mechanism applies here)
Journal entry for Purchase of Fixed Asset under GST:
Sr. No. Particulars Dr. Cr.
` `
1. When any asset is purchased within the state
Assets A/c ………………Dr. 200,000.00
Input CGST A/c ……………Dr. 16,000.00
Input SGST A/c ……………Dr. 16,000.00
To Creditors or BankA/c 232,000.00
2. When any asset is purchased from other state
Assets A/c ………………Dr. 300,000.00
Input IGST A/c ……………Dr. 48,000.00
To Creditors or Cash BankA/c 348,000.00
3. When any asset is purchased from other Country
Assets A/c ………………Dr. 200,000.00
Input IGST A/c ……………Dr. 32,000.00
To Creditors or BankA/c 200,000.00
To IGST Payable A/c. 32,000.00
(Reverse charge mechanism applies here)
Journal entry for set off & Payment of GST:
 To set-off & Payment of 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 only after setting of OutputIGST
liability, Output CGST liability.)
 To set-off & Payment of Output CGST
Output CGST A/c. …… Dr.

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 IJournals: International Journal of Social Relevance & Concern
ISSN-2347-9698
Volume 5 Issue 9 September 2017
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 only after setting of Output IGST
liability.)
 To set off & Payment of Output IGST
Output IGST A/c. ….Dr.
To Input IGST A/c. ….. Cr.
To Electronic Cash ledger A/c. …. Cr.
OBJECTIVE OF THE RESEARCH:
This research study is an attempt to critically analyzethe methods of recording the GST related transactions by
following the accounting principles, in the books of accounts of the organization to present the true picture of the
financial statements.
RESEARCHMETHODOLOGY:
A critical analysis was performed by meeting experts in the field of accounting to understand the transactional
mechanism of GST. Moreover, own personal experience of in the field of finance and accounts played an
important role in understanding the various aspects of accounting entries in a comfortable manner. The research
paper is an attempt of exploratory research, based on the secondary data sourced from journals, internet, article
published on websites and previous research papers. Descriptive type research design is adopted to have more
accuracy and rigorous analysis of research study.
RESULTS AND CONCLUSION:
GST has not only subsumed the existing indirect taxes such as Service Tax, VAT, Excise, CST etc. but also has
simplified the business and accounting processes.Moreover, Government is spreading awareness through various
means of communications. Regular conference, seminars and meetings are being organized to get accustomed
with the current scenario.
References:
 Empowered Committee of Finance Ministers (2009). First Discussion Paper on Goods and Services Tax
in India, The Empowered Committee of State Finance Ministers, New Delhi
 Indirect Taxes Committee, Institute of Chartered Accountants of India (ICAI) (2015). Goods and
Service Tax (GST). Retrieved from: http://idtc.icai.org/download/Final-PPT-on-GST-ICAI.pdf
 ICSI (2015). Reference on Goods and Service Tax. Retrieved from:
https://www.icsi.edu/Docs/Website/GST_Referencer.pdf
 www.gstindia.com/basics-of-gst-implementation-in-india/
 www.taxguru.in/goods-and-service-tax/goods-service-tax-gst-2.html
 www.cleartax.in
 www.gstn.org
 https://www.gst.gov.in/
 https://canirmalg.wordpress.com/2017/07/03/%E2%80%8Bsuggested-accounting-entries-for-gst/
 http://content.edupristine.com/All-About-GST.pdf accessed on 1st of August, 17

Empowered Committee of Finance Ministers (2009). First Discussion Paper on Goods and
Services Tax in India, The Empowered Committee of State Finance Ministers, New Delhi

Indirect Taxes Committee, Institute of Chartered Accountants of India (ICAI) (2015). Goods and
Service Tax (GST). Retrieved from: http://idtc.icai.org/download/Final-PPT-on-GST-ICAI.pdf

Mawuli, A. (2014): Goods and Service Tax- An Appraisal, Paper presented at the the PNG
Taxation Research and Review Symposium, Holiday Inn, Port Moresby,29-30.

Vasanthagopal, Dr. R. (2011), GST in India: A Big Leap in the Indirect Taxation System,
International Journal of Trade, Economics and Finance, Vol. 2, No. 2, April 2011.

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 IJournals: International Journal of Social Relevance & Concern
ISSN-2347-9698
Volume 5 Issue 9 September 2017

Ahamad, E. and Poddar, S. (2009), Goods and Service Tax Reforms and Inter governmental
Consideration in India, Department of Economic Affairs Ministry of Finance Government of
India.

Kumar, N. (2014), Goods and Service Tax in India-A Way Forward, Global Journal of
Multidisciplinary Studies, Vol 3, Issue 6, May 2014.

www.gstindia.com/basics-of-gst-implementation-in-india/

www.prsindia.org/billtrack/the-constitution-122nd-amendment-gst-bill-2014-3505/

www.taxguru.in/goods-and-service-tax/goods-service-tax-gst-2.htm
Empowered Committee of Finance Ministers (2009). First Discussion Paper on Goods and
Services Tax in India, The Empowered Committee of State Finance Ministers, New Delhi

Indirect Taxes Committee, Institute of Chartered Accountants of India (ICAI) (2015). Goods and
Service Tax (GST). Retrieved from: http://idtc.icai.org/download/Final-PPT-on-GST-ICAI.pdf

Mawuli, A. (2014): Goods and Service Tax- An Appraisal, Paper presented at the the PNG
Taxation Research and Review Symposium, Holiday Inn, Port Moresby,29-30.

Vasanthagopal, Dr. R. (2011), GST in India: A Big Leap in the Indirect Taxation System,
International Journal of Trade, Economics and Finance, Vol. 2, No. 2, April 2011.

Ahamad, E. and Poddar, S. (2009), Goods and Service Tax Reforms and Inter governmental
Consideration in India, Department of Economic Affairs Ministry of Finance Government of
India.

Kumar, N. (2014), Goods and Service Tax in India-A Way Forward, Global Journal of
Multidisciplinary Studies, Vol 3, Issue 6, May 2014.

www.gstindia.com/basics-of-gst-implementation-in-india/

www.prsindia.org/billtrack/the-constitution-122nd-amendment-gst-bill-2014-3505/

www.taxguru.in/goods-and-service-tax/goods-service-tax-gst-2.htm

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