Earlier different accounts were required for the accounting of different taxes such as VAT, CST, CENVAT, Excise duty, Various Countervailing duties etc.
However, under the New GST regime, the different taxes have been subsumed in GST. So the number of accounts required to be created has reduced drastically. Now the business has to maintain the Accounts under three major heads that are:
A separate account is required under each head for differentiating the tax paid on inputs and tax received on output. Such a treatment enables the business to ascertain the amount of Input GST and Output GST separately. The separate treatment will enable the business to determine easily the amount of tax liability. He is required to pay under GST and the amount that is available for him to take credit.
So the major accounts that are required to be created under GST for accounting purpose are as follows:
For making the payment, an additional account is required to be created as Electronic Cash Ledger which is to be maintained on GST portal and used for paying the tax liability.Now let’s understand these accounts with the help of an example:
Mr. Harish a Cement dealer has done some transaction in the month of April 2019 and requires to ascertain his tax liability and the entries needed to be done in books of accounts. The transactions are as follows:
The GST rate applicable to Cement is 28% and the same for the packaging material. Moreover, for the professional fee, the rate is 18%
|Input SGST 14% A/c||Dr.||21000|
|Input CGST 14% A/c||Dr.||21000|
|Input IGST 28% A/c||Dr.||19600|
|To Creditors/ Bank A/c||89600|
|Packaging Material A/c||Dr.||40000|
|Input SGST 14% A/c||Dr.||5600|
|Input CGST 14% A/c||Dr.||5600|
|To Creditors/ Bank A/c||51200|
|Debtors/ Bank A/c||Dr.||128000|
|To Sales A/c||100000|
|To Output SGST 14% A/c||14000|
|To Output CGST 14% A/c||14000|
|Debtors/ Bank A/c||Dr.||76800|
|To Sales A/c||60000|
|To Output IGST 28% A/c||16800|
|Legal Consultation Fee A/c||Dr.||20000|
|Input SGST 9% A/c||Dr.||1800|
|Input CGST 9% A/c||Dr.||1800|
|To Bank A/c||23600|
The total amount of Tax under different categories are as follows:
|Input Tax||Set off Against|
|CGST||First for IGST then CGST|
|SGST||First for IGST then SGST|
|IGST||First IGST then CGST followed by SGST|
|Particulars||Credit Available||CGST||SGST||IGST||Balance Credit Left|
|Less: Input Tax|
|Net Tax payable||Nil||Nil||Nil|
The Extra Input Tax can be carried forward or can be claimed as a refund.
|Output IGST A/c||Dr.||16800|
|To Input IGST A/c||16800|
|Output CGST A/c||Dr.||14000|
|To Input IGST A/c||2800|
|To Input CGST A/c||11200|
|Output SGST A/c||Dr.||14000|
|To Input SGST A/c||14000|
|Output SGST A/c||Dr.|
|Output CGST A/c||Dr.|
|Output IGST A/c||Dr.|
|To Electronic Cash Ledger A/c|
At the time of filing the annual return GSTR-9, the business is required to reconcile the balance as per the return, and the balance shown in the books of accounts and adjust the books or return accordingly if some error is discovered.
Whether the introduction of GST has actually benefited and eased the procedures in Finance and accounts or it has increased the hardships??This would be a tough thing to be concluded for now. ormally, introduction of any new law or provision is seen negative in the transitional phase. So is the case with GST. The most appropriate thing at the moment would be to let us wait for some more time till GST rolls out in its complete sense in the economy and then analyse the ease or hardship status of the stakeholders.
Complete guide covering all the basic tax related terms. So, that tax terms will not work as a road-stopper in your way!!
Comprehensive Guide containing all Information that you must know while filing of your ITR for FY 2018-19 (AY 2019-20).
Free Income Tax Calculator for Assessment Year (AY) 2018-2019 and AY 2017-2018 with new budget changes.
Calculate HRA exemption based on your salary for AY 2018-19. Make accurate calculations of HRA for employees.
Hire smartest eCA's to File Your Income Tax Return. CA Assisted Filing of ITR. File your Income Tax Return with confidence and ease.
Tax2win is an efiling portal to prepare and efile income tax return Online. Tax2win helps individuals to file their income tax return.