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Accounting of advance to vendor & invoice settlement in gst

Accounts 2253 views 2 replies

Recently provided by GST council to deduct GST amount from advance given to vendor; buyer can avail input credit on such advance. Guideline also provided to vendor to adjust GST on advance received and taxed on net of advance (plus GST on Advance) bill amount. What cound be Journal entries pattern in order to care for knocking off advance, recovery of advance, GST, GST input, vendor/customer A/c etc.

The reason of query is because liabilities of GST laid on both side linked with advance & Sale/Purchase. It would be good enough to guide on both side i.e. vendor & customer end accounting treatement. I tried but couldn't !! angel

Regards

Replies (2)

let me clear one thing first buyer will not take credit of gst paid on advance payment, he can carry forward it & TAKE THE whole itc when goods received

for vendor-on advance received

1. Cash a/c dr -10000

 to buyer a/c 10000

 gst advance a/c -1000

to gst a/c payable 1000

gst payable a/c -dr 1000

  to cash -1000

 

2. on sales made

buyer a/c - dr 110000

to sale -100000

to gst payable a/c -10000

3. gst payable a/c 10000

 to gst advance a/c 1000

to cash a/c 9000

for buyer

1. on cash payment

vendor a/c -10000

to cash -10000

on purchase of goods

2. purchase a/c - 100000

 sgst/cgst/igst-10000

 to vendor a/c 110000/-

3. vendor -100000

to cash -100000

Mamm,

I appreciate your prompt response

Thanks


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