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Thursday, 21 June 2018

How to write Journal Entries of GST ?

Before recording journal entries , it is very important to know about the basic terms used in GST journal entries.

                         CGST/SGST

when goods are sold or purchased within a state , CGST/SGST is levied. Rate of tax is half of the GST rate applicable on a particular goods or service. 

                           IGST 

IGST is levied at the rate of GST applicable. This tax is levied when sale or purchase is made outside the state.

Further, when we purchase , we pay tax. In this situation following three accounts are debited according to the case

  • Input CGST
  • Input SGST
  • Input IGST

When we make sale , following accounts according to the transactions are credited with sales account.

  • Output CGST
  • Output SGST
  • Output IGST
For example, If you purchased goods for Rs 50000 and paid 10℅ CGST and SGST then following journal entry will be recorded:

Purchase      A/c  Dr 50000
Input SGST  A/c   Dr 5000
Input CGST  A/c   Dr 5000
             To Bank A/c                60000

If you are selling goods then you collect GST on behalf of government.
Output CGST/SGST/IGST  accounts are credited with sales account.

After that you have to find the difference between GST paid and collected. If you have collected GST more than balance must be paid to the government by crediting bank account.

Further in the following cases, you are allowed to reverse account. E.g if you have paid tax by debiting Input SGST then credit input SGST account with the proportionate amount. 


  • When proprietor draws goods for personal use.
  • When goods are given as samples.
  • When goods are given as charity.
  • When goods are lost 
  • When you return goods.


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