Journal Entries under GST

Purchase capital goods by paying Principal amount + CGST+SGST whose ITC is blocked under section 17 (5 ) what will be its general entry and under which voucher and in which group in Tally ERP 9???
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Quick Summary
This discussion explains how to handle journal entries for capital goods purchased under GST when the Input Tax Credit (ITC) is blocked. It outlines two methods for recording these transactions in Tally ERP 9, with a preferred option that ensures accurate GST reporting and asset capitalisation. The preferred method involves a purchase entry detailing the asset and tax, followed by a journal transfer of the tax to the asset account, allowing depreciation on the full amount.

There are 2 options:

Opt1 (preferred)

1) Make a purchase entry showing the break up of asset and tax (ensure to configure the asset under ineligible credit category)

2) Transfer the tax component to the asset account back (through Journal under statutory adjustment option)

Opt2: (not preferred)

1) Make a journal entry to record the total value of the capital asset (including tax)

Opt2 is not preferred because such entries would not form part of GST return summary in Tally

 

You will have to capitalize the tax amount with the asset. The tax amount will form part of value of asset. Depreciation will be claimed don the whole amount.

Thank You

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