GST in sales

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When preparing your profit and loss account, sales should generally be recorded excluding GST. GST collected from customers is an outstanding liability, not revenue. If this GST is not recovered from the buyer, it becomes an expense. GST on purchases, if eligible for input tax credit, is treated as an asset. Paying GST to the government settles this liability.

Chaitanyaa

Chaitanyaa (Querist)

05 June 2021 While preparing profit and loss account , whether the sales is including GST or excluding GST? What is the accounting treatment ?
In the same way when GST is deposited by firm into govt account ,whether it is an expense?

CA Altamush Zafar

CA Altamush Zafar (Expert)

05 June 2021 Sales is excluding gst. Gst on sales if not paid is outstanding liability. Where gst amount is recovered from buyer then it does not affect p&l but if gst amount is not recovered from buyer then that amount is charged to expense.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

06 June 2021 GST on sales is not part of P&L
GST on purchase (eligible input tax credit) is an asset and that on sales will be a liability. When payment is made to the govt, this liability either gets reduced or zeroed.

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