My firm is having an eligible input tax credit on office expense (common) for the year. As 95% of our sale is non-gst sale petrol and diesel we don't plan to avail ITC for the common expense. We hope that it is ok to add the input tax portion with the office expense head in an entry as:
office exp xxx (inclusive of GST)
to. cash. xxx
please advise if there are any issues with the entry or any rules or disclosures that we are violating.
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ITC not availed in GSTR 3B
Replies (6)
Quick Summary
For office expenses you cannot claim input tax credit.
Sorry, didn't knew we can't , can you quote the rule or section which makes it ineligible, as far as we thought all business related expenses can be claimed as an input.
You are not claiming input tax credit so you can make entry by debiting GST with expenditure because GST paid on expenditure is part of expenses.
By expenses a/c Dr.(including ITC on expenses)
to cash/bank/party
By expenses a/c Dr.(including ITC on expenses)
to cash/bank/party
@ sanjay sunny
Your accounting treatment is absolutely correct
Hello sanjay, the suggestion provided earlier is incorrect. Any expense incurred for the furtherance of business is eligible for itc, including office expenses, unless blocked specificaly [e.g under sections such as 17(5)]. As for your journal entry, the treatment seems appropriate since you are not taking credit of the GST component, it cannot be a balance sheet item and can be expensed out.
Thanks....
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