Hi Members,
I have a query, my client is an Individual and doing business in Internet industry. He need to pay some software payments to overseas where Reverse charge on GST is applicable. What will be the accounting treatment and GSTR-3B reporting?
I also have some clarification on it. Is is correct?
As per our audit report you have found that we do not have deposited the GST under reverse charge on payments made to overseas.
I would like to explain this in detail with the following example:-
If I paid Rs. 100 to facebook towards advertisement expenses and facebook is not registered in India
| 1 | Facebook Dr | 100 | Liabiliyt created | |||||
| Facebook Dr | 18 | |||||||
| To HDFC Bank Ltd. | 100 | |||||||
| To IGST Liability | 18 | |||||||
| 2 | IGST Liability Dr | 18 | Liability Paid | |||||
| To HDFC Bak Ltd. | 18 | |||||||
| 3 | IGST ITC Dr | 18 | ||||||
| To Facebook | 18 | |||||||
| 4 | IGST payble Dr | 18 | It means I no need to pay Rs. 18 from my normal liability | |||||
| To IGST ITC | 18 | |||||||
After passing above entries Facebook account will be nil with Rs. 18 and Liability of Rs. 18 will stand in books which we will pay from Bank
Once we will pay it from Bank, we will be eligible for taking INPUT of the same in the same month.
We can utilise this input to clear our any liability of GST except reverse charge
The problem was in accounting entries ( GST Liability under reverse charges was adjusted from INPUT Ledger instead of cash Ledger ) and we have paid GST Liability correctly which is also reflecting in our GST return
CAclubindia
