Accounting Entry in GST
This query is : Resolved
13 September 2025
1. At the end of the year it is seen that a sum of Rs. 2000 paid excess due to wrong return. Our Auditor is saying that this amount will be shown under the head of P/L account as Expenses. Please advise what is the actual accounting entry.
2. During checking of the GST credit ledger the FY 2024-25 is seen that one IGST amount of Rs. 2000 related March 2019 has been adjusted from the input balance. Then how to pass the accounting entry for the amount of Rs.2000.
3. As per the books, the opening balance of GST Credit ledger showing Rs. 200000. However as per the Electronic Credit Ledger the opening balance is Rs. 50000. The auditor is saying that please make an adjustment entry for the difference amount. Please advise for the same to pass an accounting entry.
2. During checking of the GST credit ledger the FY 2024-25 is seen that one IGST amount of Rs. 2000 related March 2019 has been adjusted from the input balance. Then how to pass the accounting entry for the amount of Rs.2000.
3. As per the books, the opening balance of GST Credit ledger showing Rs. 200000. However as per the Electronic Credit Ledger the opening balance is Rs. 50000. The auditor is saying that please make an adjustment entry for the difference amount. Please advise for the same to pass an accounting entry.
16 September 2025
Excess Payment of Rs. 2000 Due to Wrong Return
The Rs. 2000 paid in excess should not simply be booked as an expense unless it is irrecoverable. If the amount is refundable or can be adjusted in future GST liabilities, it should be shown as a recoverable asset (like "GST Receivable/Recoverable A/c") rather than an expense. The typical journal entry:
When identifying the excess payment
Debit: GST Receivable/Recoverable A/c ₹2,000
Credit: Bank/Cash A/c ₹2,000
If it is subsequently determined not to be recoverable, then only transfer it to Expenses/P&L.
The Rs. 2000 paid in excess should not simply be booked as an expense unless it is irrecoverable. If the amount is refundable or can be adjusted in future GST liabilities, it should be shown as a recoverable asset (like "GST Receivable/Recoverable A/c") rather than an expense. The typical journal entry:
When identifying the excess payment
Debit: GST Receivable/Recoverable A/c ₹2,000
Credit: Bank/Cash A/c ₹2,000
If it is subsequently determined not to be recoverable, then only transfer it to Expenses/P&L.
16 September 2025
IGST Amount of Rs. 2000 (Related to March 2019) Adjusted from Input Balance
When an old IGST input credit is adjusted against current liabilities or written back, the entry typically is:
If set off against GST liability:
Debit: GST Payable A/c ₹2,000
Credit: IGST Input Credit A/c ₹2,000
If reversed due to being ineligible/unutilizable:
Debit: P&L Account (Expenses) ₹2,000
Credit: IGST Input Credit A/c ₹2,000
The second entry applies if the credit is disallowed or not allowable any more.
When an old IGST input credit is adjusted against current liabilities or written back, the entry typically is:
If set off against GST liability:
Debit: GST Payable A/c ₹2,000
Credit: IGST Input Credit A/c ₹2,000
If reversed due to being ineligible/unutilizable:
Debit: P&L Account (Expenses) ₹2,000
Credit: IGST Input Credit A/c ₹2,000
The second entry applies if the credit is disallowed or not allowable any more.
16 September 2025
Difference in GST Credit Ledger Opening Balance (Book: ₹2,00,000, Portal: ₹50,000)
A difference of ₹1,50,000 must be adjusted so your books match the GST portal. If this is due to ineligible or uncredited ITC, the adjustment entry is:
Debit: P&L Account (Expenses) ₹1,50,000
Credit: GST Input Credit (CGST, SGST, IGST as applicable) ₹1,50,000
This brings the input credit in your books in line with the actual Electronic Credit Ledger balance.
A difference of ₹1,50,000 must be adjusted so your books match the GST portal. If this is due to ineligible or uncredited ITC, the adjustment entry is:
Debit: P&L Account (Expenses) ₹1,50,000
Credit: GST Input Credit (CGST, SGST, IGST as applicable) ₹1,50,000
This brings the input credit in your books in line with the actual Electronic Credit Ledger balance.
16 September 2025
Thank you so much sir.
16 September 2025
You are welcome.
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