GST related Journal Entries -Examples

Sales Entries

a.) Business-to-Business Sales (B2B) : When Company does the sale to a Registered customer, it is known as B2B sales. We are also aware that when shipping location code and place of supply code are same, then the transaction is treated as "intrastate sale" and CGST and SGST are applicable. Transactions entries are updated in "CGST" and "SGST" payable accounts. If the shipping location state code and place of supply are in different state, then the transaction is treated as Interstate and IGST is payable. We also need to remember that GST customer type should be Registered and registration number, State Code and address are mandatory for these type of transactions.

B2B is simply shorthand for “Business to Business”, and it generally refers to who we sell our product to. If our company sells a product or service to other businesses, we're a B2B company.

Entries for Intrastate Sale to a Registered Customer:

Customer Account A/c ........Dr          118
                            To  SGST Payable A/c                        9
                            To  CGST Payable A/c                       9
                            To  Sales A/c                                      100


Credit Memo Entry for Intrastate Sale to a Registered Customer:

   Sales A/c ....................................Dr.          100 

   SGST Payable A/c......................Dr.              9

   CGST Payable A/c.....................Dr.              9

              To Customer A/c                                                                  118

Note:

a) Entries for Unregistered Customers are also same as Registered Customer

b) Entries related to Interstate also remain the same, only CGST & SGST are replaced with IGST.

c) Entries for "Services" are also same as "Goods"

Purchase Entries

a) Entries related to Register Vendor for Purchase Transaction (Intrastate Purchase) with credit availment (Goods & Services)

Purchases Account……………..…Dr.    10000
SGST Receivable Account ……….Dr.     1000
CGST Receivable Account ………Dr.      1000
                                                   To Vendor Account                      12000




Purchase Return Entries

Vendor Accounts.........................Dr.          12000
                                           To Purchase Accounts                              10000
                                                SGST Receivable Accounts                  1000
                                                CGST Receivable Accounts                  1000



b) Entries related to Register Vendor for Purchase Transaction (Intrastate Purchase) with non-credit availment

Purchase Accounts..........Dr.     10000

                     To Vendor Accounts      10000

a) Entries related to Un-Register Vendor for Purchase Transaction (Intrastate Purchase) with credit availment (Goods)

      Purchases Account……………..…Dr.    10000
      SGST Receivable Account ……….Dr.     1000
      CGST Receivable Account ………Dr.      1000
                                                   To Vendor Account                      10000
                                                    SGST Payable Account                1000
                                                    CGST Payable Account               1000



b) Entries related to UnRegister Vendor for Purchase Transaction (Intrastate Purchase) with credit availment (Services)

      Purchases Account……………..…Dr.    10000
      SGST Receivable Account (Interim)……….Dr.     1000
      CGST Receivable Account (Interim)………Dr.      1000
                                                   To Vendor Account                            10000
                                                    SGST Payable Account(Interim)                1000
                                                    CGST Payable Account(Interim)                1000

Note: 

When is Reverse Charge Applicable?

Supply from an Unregistered dealer to a Registered dealer :

If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.

The registered dealer who has to pay GST under reverse charge has to do self-invoicing for the purchases made.

For Inter-state purchases the buyer has to pay IGST. For Intra-state purchased CGST and SGST has to be paid under RCM by the purchaser.

c) Entries related to UnRegister Vendor for Purchase Transaction (Intrastate Purchase) with credit Non-Availment (Services)

      Purchases Account……………..…Dr.    12000
                                                    To Vendor Account                            10000
                                                    SGST Payable Account(Interim)                1000
                                                    CGST Payable Account(Interim)                1000


Payment done & applied to  UnRegister Vendor for Purchase Transaction (Intrastate Purchase) with credit availment (Services)

      Purchases Account……...........………..…Dr.    10000
      SGST Receivable Account ..............…….Dr.      1000
      CGST Receivable Account ..............……Dr.       1000
      SGST Payable Account(Interim)..............Dr        1000
      CGST Payable Account(Interim)..............Dr       1000                                         

                                                    To Vendor Account                                   10000
                                                    SGST Payable Account                              1000
                                                    CGST Payable Account                              1000

                                                    SGST Receivable Account (Interim)          1000
                                                    CGST Receivable Account (Interim)          1000

Time of Supply under Reverse Charge

A. Time Of Supply in case of Goods

In case of reverse charge, the time of supply shall be the earliest of the following dates:

1. the date of receipt of goods
2. the date of payment

If it is not possible to determine the time of supply, the time of supply shall be the date of entry in the books of account of the recipient.

B. Time Of Supply in case of Services

In case of reverse charge, the time of supply shall be the earliest of the following dates:

1. The date of payment