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ITC calculations

Yasaswi Gomes new (Finance ) (4545 Points)

09 January 2023

Hi,

We all know that

Inputt gst is current asset

Output gst is current liability

How to calculate ITC and how to treat it on the balance sheet with entries please.

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4 Replies

veerendar singh (tax consultant) (3306 Points)
Replied 09 January 2023

Itc need not be calculated as such. it will be mentioned in the purchase invoice.

value of goods will be booked as expense while the gst portion will go to current asset

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prasad Nilugal ( GST Practitioner & Accounts ) (14901 Points)
Replied 09 January 2023

Whatever purchases you made on which GST has been paid is your Input Tax credit.( except exempt, ineligible, blocked credit etc ) so total of puchase is your ITC . ( Input , Input services and Capital Goods puchase)

Purchase of goods or services entry will be

Purchase A/c Dr
Input CGST A/c Dr
Input SGST A/c Dr
Input IGST A/c Dr
To Trade creditor A/c Cr
(purchase made during tax period)

For purchase of Capital Goods entry will be

Asset A/c Dr
Input CGST A/c Dr
Input SGST A/c Dr
Input IGST A/c Dr
To Trade creditor A/c Cr
( purchase of Capital Goods)

Show Input CGST A/c , Input SGST A/c , Input IGST A/c under Current Asset -Asset side -Balance sheet.

On 31st March you have to transfer Input tax credit balance to" Balance with Revenue Authority A/c" and again on 1st April reverse the same entry for utilisation of ITC in the next year.

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