CGST/SGST Input tax Classification in Tally Prime

Hi Sir/Madam

I have Taken CGST/SGST ledgers on Sales under Current Liabilities (Duties and Taxes) classification

There is CGST/SGST Input tax credit on Purchases as per GSTR 2B 

Can i take same classifiaction for this Purchase related CGST/SGST Input tax credit like Current Liabilites (Duties and taxes ) 

Or is it required to take Purchase related CGST/SGST under Current Assets 

Please advise

Thanks

Replies (1)
Quick Summary
CGST/SGST output tax on sales is shown under Current Liabilities, while input tax credit on purchases should be classified under Current Assets in Tally Prime. ITC represents a recoverable asset, not a liability, so separate ledgers for CGST/SGST Input Tax Credit should be created under Current Assets.

For the CGST/SGST input tax credit on purchases, it's recommended to classify them under Current Assets, rather than Current Liabilities (Duties and Taxes).

 Here's why: -

Current Liabilities represent amounts owed by your business, whereas Current Assets represent resources owned or controlled by your business. - 

Input tax credit is a benefit that reduces your tax liability, so it's an asset to your business. - 

Classifying input tax credit under Current Assets will help you accurately reflect your business's financial position and ensure compliance with accounting standards. So, to answer your question: - 

Take the CGST/SGST input tax credit on purchases under Current Assets. - Create a separate ledger or account specifically for input tax credit, such as "CGST Input Tax Credit" and "SGST Input Tax Credit" under Current Assets. 

 

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