Practical GST Journal Entries: A Quick Cheat Sheet#
The Core Principle of GST Accounting#
Before diving into the entries, remember this golden rule:
- Input GST (Purchases): An Asset. You debit it because it represents a credit you can claim from the government.
- Output GST (Sales): A Liability. You credit it because it is tax you have collected and must pay to the government.
Here is your cheat sheet for the most common GST scenarios.
1. Intra-State Purchase (Within the same State)#
Scenario: You purchase goods worth ₹10,000 + 18% GST (9% CGST, 9% SGST) on credit.
- Debit: Purchase A/c - ₹10,000
- Debit: Input CGST A/c - ₹900
- Debit: Input SGST A/c - ₹900
- Credit: Sundry Creditor A/c - ₹11,800
2. Inter-State Sale (To another State)#
Scenario: You sell goods worth ₹20,000 + 18% IGST on credit.
- Debit: Sundry Debtor A/c - ₹23,600
- Credit: Sales A/c - ₹20,000
- Credit: Output IGST A/c - ₹3,600
3. The Reverse Charge Mechanism (RCM) on Freight#
Scenario: You pay a Transporter ₹5,000. You must pay 5% GST directly to the government under RCM. This is a two-part entry because you must record the liability, and you can simultaneously claim it as an asset (ITC).
- Debit: Freight Expense A/c - ₹5,000
- Debit: Input CGST (RCM) A/c - ₹125
- Debit: Input SGST (RCM) A/c - ₹125
- Credit: Transporter (Creditor) A/c - ₹5,000
- Credit: Output CGST (RCM Payable) A/c - ₹125
- Credit: Output SGST (RCM Payable) A/c - ₹125
4. Setting off ITC against Output Tax Liability (Month-End)#
Scenario: You have ₹3,600 in Output IGST liability, and ₹1,800 in Input CGST/SGST. You must extinguish your liability using your available ITC assets.
- Debit: Output IGST A/c - ₹1,800 (Reducing Liability)
- Credit: Input CGST A/c - ₹900 (Reducing Asset)
- Credit: Input SGST A/c - ₹900 (Reducing Asset)
(The remaining ₹1,800 Output IGST balance will be paid via bank/cash).
Keep this cheat sheet handy on your desk to ensure your trial balance always reflects accurate GST payable and receivable positions!