ILLUSTRATIONS ON GST ACCOUNTING

Illustration 2

Dealer purchases the following goods in a State during the month of March, 2010.
Particulars	Cost of Goods (Rs.)	GST Paid (Rs.)	Total cost of Goods (Rs.)
4% GST Goods	10,00,000	40,000	10,40,000
12.5% GST Goods	8,00,000	1,00,000	9,00,000
GST Exempt Goods	2,00,000	-	2,00,000
Total	20,00,000	1,40,000	21,40,000

Other facts of the illustration are as below:

1. On March 1, 2010, there was an opening balance of Rs. 1,00,000 in the GST Credit Receivable (Inputs) Account.
2. During the month, the dealer made a stock transfer of 12.5% GST goods costing Rs. 2,50,000 out of the State. The stock transfer was an exceptional case for the dealer and, therefore, he had not made an estimate in this regard at the time of purchase. GST credit to the extent of 4% is not allowed on stock transfer as per the State GST laws.
3. The dealer utilised 4% GST goods costing Rs. 2,00,000 as input for manufacture of exempted goods. The decision to manufacture the exempted goods was made by the dealer after the purchase of goods and, therefore, he had not made an estimate in this regard at the time of purchase. As per the State laws GST credit would not be available on the inputs used for the manufacture of exempted goods. 
4. GST payable on sales made during the month is Rs. 1,15,500.
   

ACCOUNTING ENTRIES

Purchase of goods. 4% GST Goods Purchases A/c Dr. Rs. 10,00,000 12.5 % GST Goods Purchases A/c Dr. Rs. 8,00,000 GST Exempt Goods Purchases A/c Dr. Rs. 2,00,000 GST Credit Receivable (Inputs) A/c Dr. Rs. 1,40,000                           To Bank A/c Rs. 21,40,000 (Being goods purchased and input tax paid)

Since the dealer has recognised full GST credit at the time of purchase, he is required to reverse the GST credit to the extent of 2% at the time when the stock transfer takes place. The dealer passes the following entry to record the reversal amounting to Rs. 5,000 (Rs. 2,50,000 x 2%). 12.5 % GST Goods Purchase A/c        Dr.  Rs. 5,000               To GST Credit Receivable (Inputs) A/c Rs. 5,000 (Being GST Credit reversed to the extent of 2% on stock transfer)

As per the State GST laws credit of 4% GST would not be available as the dealer is making sale as exempted goods. The dealer passes entry to record the GST reversal amounting to Rs.8,000 (Rs. 2,00,000 x 4%) arising because of goods used as input for manufacture of exempted goods. 4% GST Goods Purchase A/c        Dr. . Rs. 8,000              To GST Credit Receivable (Inputs)A/c Rs. 8,000 (Being GST credit reversed on the goods used as input for manufacture of exempted goods)

GST Credit Receivable (Inputs) A/c
Date	Particulars	Balance
		Debit (Rs.)	Credit (Rs.)	Dr./Cr.	Amount (Rs.)
March 2010	To Balance b/d To Bank By 12.5 % GST Goods Purchase A/c By 4% GST Goods Purchase A/c By Bank By GST Payable A/c By Balance c/d	1,00,000 1,40,000	10,000 8,000 20,000 1,15,500 86,500	Dr. Dr. Dr. Dr. Dr. Dr.	1,00,000 2,40,000 2,30,000 2,22,000 2,02,000 86,500
	Total	2,40,000	2,40,000

Extracts from Profit and Loss Account

Particulars	Amount (Rs).	Particulars	Rs.
4% GST Goods Purchases	Dr. Rs. 10,08,000	4% GST Goods Sales	Xxx
12.5 % GST Goods Purchases	Dr. Rs. 8,05,000	12.5 % GST Goods Sales	Xxxx
GST Exempt Goods Purchases	Dr. Rs. 2,00,000	GST Exempt Goods Sales	xxxxxxx
Profit
Total		Total

Extracts from the Balance Sheet
Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Sundry Creditors	xxx	Loans and Advances GST Credit Receivable (Inputs  A/c)	86,500
Secured Loans	xxx

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