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ACCOUNTING ENTRIES UNDER GST FOR 2021-2022

Since the introduction of GST, MSME Enterprises & Small Practitioners have faced issues due to dynamic changes in the law as well as updating the same in the books of accounts.

Now that GSTR-2A/2B also has to be considered while claiming input, Vendors face difficulty in maintaining the books of accounts of the same.

Through this Article we are making an attempt for MSME & Accountants and Small Practitioners who are backbone for GST Compliances and Reconciliations for the respective organization.

Accounting under GST for the FY 2021-22

Number of Ledgers required to be made

  1. OUTPUT IGST
  2. OUTPUT CGST
  3. OUTPUT SGST
  4. INPUT CGST
  5. INPUT SGST
  6. INPUT IGST
  7. GST PAYABLE
  8. TAX UNDER REVERSE CHARGE
  9. ELECTRONIC CASH LEDGER
  10. ELECTRONIC CREDIT LEDGER
  11. UNCLAIMED CGST A/C (To be done at year end)
  12. UNCLAIMED SGST A/C (To be done at year end)
  13. UNCLAIMED IGST A/C (To be done at year end)
 

ACCOUNTING ENTRIES

SL NO

Transaction

Entry

Remarks

1

At the time of Inward Supply

PURCHASE/EXP A/c Dr

Input CGST A/c Dr

Input SGST A/c Dr

Input IGST A/c Dr

Creditors/Bank/Cash Cr

Inward Supply needs to be recorded in the mentioned way, would suggest to maintain a policy for all kinds of inward supplies to be recorded in similar voucher (For Inventory, every software has additional disclosure anyway item wise)

2

At the time of Outward Supply

Debtors/Cash/Bank A/c Dr

Sales Ledger A/c     Cr

Output CGST A/c    Cr

OUTPUT SGST A/c Cr

OUTPUT IGST A/c   Cr

Outward supply relates to Sales Invoices issued, every accounting software automatically categorizes GST Rate item wise, HSN wise would keep the track of rate

3

In case of reverse Charge Applicability

Freight Charges A/c Dr

Tax under Reverse Charge A/C Dr

To GST Payable A/c

Reverse Charge Applicability would be in accordance with Section 9(3),9(4) & 9(5), now in this you can also detail in further by making CGST, SGST & IGST Separately, but that would make it more complicated

4

In case of Gst Payable Entry

OUTPUT CGST A/C Dr

OUTPUT SGST A/c Dr

OUTPUT IGST A/c Dr

 INPUT CGST A/c Cr

INPUT SGST A/c Cr

INPUT IGST A/c Cr

GST PAYABLE A/c Cr

This entry would come up in most of the situations where, there would be excess of tax collected over excess of eligible input appearing in GSTR-2B.

5

In case of Excess Credit

OUTPUT CGST A/c Dr

OUTPUT SGST A/c Dr

OUTPUT IGST A/c Dr

ELECTRONIC CREDIT LEDGER A/c Dr

INPUT CGST A/c Cr

INPUT SGST A/c Cr

INPUT IGST A/c Cr

This entry would come up at the month end in case of where the credit available is in excess of Taxes collected.

6

Tax Payment

ELECTRONIC CASH LEDGER A/c Dr

BANK/CASH Cr

Payment of cash in Gst portal, again you can have 3*4=12 ledgers in it but that would just increase the accounting detail would suggest to have single (Since the data is available in Gst portal of the same.)

7

CREDIT NOTE/DEBIT NOTE ISSUED

SALE CONTROL A/C Dr

OUTPUT CGST A/c Dr

OUTPUT SGST A/c Dr

OUTPUT IGST A/c Dr

To Debtor A/c

According to the Provisions of GST Law, Credit Note/Debit note can be issued only by the taxpayer who has issued the original invoice.

8

CREDIT NOTE/DEBIT NOTE Received from Suppliers (Creditors)

Supplier A/c Dr

To Purchase Control A/c Cr

To Input CGST A/c cr

To Input SGST A/c cr

Entry passed is related to credit note issued by the supplier.

9

GST Credit not yet claimed till March

UNCLAIMED CGST A/c Dr

To Input CGST A/c Cr

Input of the Credit can be taken only when it is fulfilling all the conditions mentioned in Section 16 including uploaded by the supplier and visible in GSTR-2A/2B, the time limit of the same is upto September of next financial year and hence in the month of March’2021, the unclaimed credit can be transferred to Unclaimed account to avoid any error in subsequent financial year.

 

Above entries would ensure, your GST Liabilities, Input claim is derived and updated accurately and any omissions, corrections can be easily identified and updated, do consider the following points in case if you are planning to implement the above.

  • We have not considered tax on advances received (in case of services)
  • Tax under Reverse charge also needs to be considered in Input
  • In case of late fee liability additional entry making a levy of the fee needs to be posted in addition to the above.
  • Entry number 4 & 5 needs to be in accordance with the amount disclosed in Monthly return (Currently GSTR-3B)
  • Another Better way to avoid any GSTIN error is to create a Supplier/Customer ledger along with GSTIN as his second name through which you can avoid duplicate ledger entry as well as incorrect GSTIN Updation.
 

I hope it would be useful for all the accountants, Vendors, do let us know which is the area, Which Area Do you think an article to be made explaining Accounting procedure.


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Category GST, Other Articles by - Yash Jain 



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