Accounting of GST Input credit and GST Liability

Here’s a simple guide to accounting entries for GST Input Credit and GST Liability:

1. When you purchase goods/services and get GST Input Credit:

• Purchase Invoice:

  Account	Debit	Credit
  Purchases / Expense A/c	₹ Amount
  Input GST (CGST/SGST/IGST)	₹ GST amt
  To Vendor / Supplier A/c		₹ Total amt

   

• Explanation:
  You debit the purchase or expense and the GST input tax (which is an asset as it can be claimed back). Credit the vendor with the total invoice amount.

2. When you sell goods/services and collect GST (Output GST / GST Liability):

• Sales Invoice:

  Account	Debit	Credit
  Debtor / Customer A/c	₹ Total amt
  To Sales A/c		₹ Amount
  To Output GST (CGST/SGST/IGST)		₹ GST amt

   

• Explanation:
  Debit customer with total amount (including GST), credit sales for net value, and credit GST liability account for output tax collected.

3. When you pay GST to the government (after adjusting input credit):

• Payment of GST liability:

  Account	Debit	Credit
  Output GST Liability A/c	₹ GST Payable (Net)
  To Bank / Cash		₹ GST Payable

   

• Note: The net GST payable = Output GST collected – Input GST credit.

4. If input credit is more than output GST (GST Refund/Carry Forward):

• Input GST (asset) will remain in your books as Input GST to carry forward or refundable GST (depending on government process).