CGST/SGST Input tax Classification in Tally Prime

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42 Points Joined October 2024

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

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On 30 November 2024 at 17:46 Report
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Master in Accounts & high court Advocate
8827 Points Joined December 2011

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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On 30 November 2024 at 21:57


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