What Is GST?? How To Pass Accounting Entries Under GST ?? Explained. ~ TwilightBox

What Is GST?? How To Pass Accounting Entries Under GST ?? Explained.

What Is GST??


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GST stands for "Goods and Service Tax" implemented nation wise by Central Government from 1st of July 2017. Its a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at national level. It will replace all the previous indirect tax levied in goods and services by central government.


Revised Tax Rates Under GST

Tax Products
0% Milk Kajal
Eggs Educations Services
Curd Health Services
Lassi Children’s Drawing & Colouring Books
Unpacked Foodgrains Unbranded Atta
Unpacked Paneer Unbranded Maida
Gur Besan
Unbranded Natural Honey Prasad
Fresh Vegetables Palmyra Jaggery
Salt Phool Bhari Jhadoo
5% Sugar Packed Paneer
Tea Coal
Edible Oils Raisin
Domestic LPG Roasted Coffee Beans
PDS Kerosene Skimmed Milk Powder
Cashew Nuts Footwear (< Rs.500)
Milk Food for Babies Apparels (< Rs.1000)
Fabric Coir Mats, Matting & Floor Covering
Spices Agarbatti
Coal Mishti/Mithai (Indian Sweets)
Life-saving drugs Coffee (except instant)
12% Butter Computers
Ghee Processed food
Almonds Mobiles
Fruit Juice Preparations of Vegetables, Fruits, Nuts or other parts of Plants including Pickle Murabba, Chutney, Jam, Jelly
Packed Coconut Water Umbrella
18% Hair Oil Capital goods
Toothpaste Industrial Intermediaries
Soap Ice-cream
Pasta Toiletries
Corn Flakes Computers
Soups Printers
28% Small cars (+1% or 3% cess) High-end motorcycles (+15% cess)
Consumer durables such as AC and fridge Beedis are NOT included here


The GST to be levied by the Centre on intra-State supply of goods and/or services is Central GST (CGST) and that by the States is State GST (SGST).
What Is SGDT,CGST and IGST???

On inter-state supply of goods and services, Integrated GST (IGST) will be collected by Centre. IGST will also apply on imports.
For e.g.: – If a Dealer in Delhi sold goods to the consumer in Delhi worth Rs. 10,000. The GST Rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case the dealer collects Rs. 1800 and Rs. 900 will go to the central government and Rs. 900 will go to the Delhi government.
Now, if the dealer in Delhi had sold goods to a dealer in Haryana worth Rs. 10000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case the dealer has to charge Rs. 18,00 as IGST. This IGST will go to the Centre.

Accounting Entries Under GST

Here are few basic business transactions to help you understand

Example 1: Intra-State

  • Mr. X Purchased good locally worth rs 10000
  • He sold them for 15000 in same state
  • He paid legal consulting fees of 500
  • He puchased furniture for office worth 5000
       Assuming CGST 8% and SGST 8%

1 Purchase A/c ………………Dr. 10000
Input CGST A/c ……………Dr.     8,00
Input SGST A/c ………    …Dr.     8,00
              To Creditors A/c 1,16,00
2 Debtors A/c ………………Dr. 1,74,000
             To Sales A/c   150000
             To Output CGST A/c        12,000
             To Output SGST A/c    12,000
3 Legal fees A/c ………..……Dr. 5,00
Input CGST A/c ……………Dr. 40
Input SGST A/c ……………Dr. 40
             To Bank A/c 5,80
4 Furniture A/c ………..……Dr. 10000
Input CGST A/c ……………Dr.                   800
Input SGST A/c ……………Dr.    800
             To ABC Furniture Shop A/c 11600

Total Input CGST=800+40+800= Rs. 1640

Total Input SGST=800+40+800=  Rs. 1640
Total output CGST=12000
Total output SGST=12000
Therefore Net CGST payable=12,000-1640=10360
Net SGST payable=                 12,000-1640=10360


5 Output CGST A/c ……………Dr. 12,000
Output SGST A/c ……………Dr. 12,000
          To Input CGST A/c 1640
            To Input SGST A/c 1640
           To Electronic Cash Ledger A/c 20720




Example 2: Inter-State

  • Mr. X purchased goods worth Rs.150000 from outside the state
  • He sold goods worth Rs.150000 locally
  • He sold goods worth Rs.10000 outside the state
  • He paid Talephone bill of Rs.5000.
  • He purchase air cooler for office worth Rs. 12000
          Assuming both CGST and SGST at 8%

1 Purchase A/c …………Dr. 1,50,000
Input IGST A/c ………Dr. 24,000
       To Creditors A/c 1,74,000
2 Debtors A/c ……………Dr. 1,74,000
       To Sales A/c 1,50,000
       To Output CGST A/c 12,000
       To Output SGST A/c 12,000
3 Debtors A/c ………………Dr. 1,16,000
        To Sales A/c 1,00,000
        To Output IGST A/c 16,000
4 Telephone Expenses A/c ..…Dr. 5,000
Input CGST A/c ………………..Dr. 400
Input SGST A/c …..……………Dr. 400
        To Bank A/c 5,800
5 Office Equipment A/c.…..Dr. 12,000
Input CGST A/c ……………Dr. 960
Input SGST A/c ……………Dr. 960
        To ABC Furniture Shop A/c 13,920

 

      Total CGST input   =400+960 =1,360
      Total CGST output =12,000

      Total SGST input   =400+960 =1,360

      Total SGST output =12,000

      Total IGST input     =24,000           

      Total IGST output   =16,000

ParticularsCGSTSGSTIGST
Output liability12,00012,00016,000
Less: Input tax credit
   CGST1,360
   SGST1,360
   IGST8,00016,000
Amount payable2,64010,640NIL
Hope the information above will be useful for you guys to understand better about GST. Thank you 

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