Accounting of IGST paid by importer on Import

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This discussion clarifies the correct accounting treatment for Integrated Goods and Services Tax (IGST) paid by importers. It explains that IGST is paid at the time of customs clearance, not to the overseas supplier. The correct journal entry involves debiting the Purchase (Import) account with the net amount after IGST and debiting the IGST Input Tax Credit account for the IGST paid, while crediting the Exporter's account.

PANKAJ MISHRA

PANKAJ MISHRA (Querist)

15 April 2022 Dear Sir,
We have made import of Euro 914.14 as per bill of Entry Rate of Exchange Rs.86.90 and we have paid Rs.20177/- towards IGST.

EURO 914.14X86.90=Rs.79,439.00
Less: IGST Rs.20177.00
Net Party Name AC Rs.59,262.00
In Tally
Purchase-Import (GST 18%) Ac DR.59,262.00
IGST 18% Input AC DR.20,177.00
To, Exporter AC CR.79,439.00
Please advice, is this entry is correct?

Lekhraj sood

Lekhraj sood (Expert)

15 April 2022 Wghat is the amount on vendor invoice

CA Puja Sharma

CA Puja Sharma (Expert)

15 April 2022 Purchase A/c Dr. Rs. 59262.00
To Supplier(Outside Country) Cr. Rs. 59262.00

IGST A/c Dr. Rs. 20177.00
To Bank or Custom House Agent A/c Cr. Rs. 20177.00
(IGST is not to eb paid to the supplier, he will not charge any GST in his invoice because he is outside India. IGST to be paid at the time of clearance)

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