Accounting Entry for DRC-03 payment of ITC mismatch (2A v/s 3B) upon filing GSTR-9 / 9C

As per GST Audit, there was payment liability for 'excess ITC availed' compared to Table 8A auto-populated ITC. Same was paid through DRC-03.

For the payment made, what will be the appropriate accounting-head for 'Debit' in the accounting entry to be passed in the books?

Replies (4)
Quick Summary
This discussion addresses the correct accounting treatment for payments made via DRC-03 due to ITC mismatches identified during GST audits. It explores the appropriate debit account for recording these payments, including any applicable interest. The suggested entry involves debiting an 'ITC Reversed' expense account and crediting the relevant GST ledgers (CGST, SGST, IGST) to settle the liability.

Paid with interest ?

Interest A/c Dr
CGST A/c Dr
SGST A / c Dr
To Bank

Thank you Balamurli Unnithan.

Since the payment is against unaccounted liability, we need to raise a GST liability first (where IGST/CGST/SGST ledgers are credited), and then, to settle the GST account we will make the above payment entry as you provided.

But first, when raising the payable GST liability what account to debit against corresponding credit to be made to the GST ledgers?

Yes , CGST & SGST

entry may be:

ITC Reversed A/c (Expense)

     TO CGST A/C

     TO SGST A/C

     TO IGST A/C

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