Goods & Services Tax Accounting

With GST subsuming a large number of indirect taxes and GST being a destination-based tax on consumption of goods or services, proper and appropriate accounting needs to be done.
Also, every person registered under GST is required to maintain books of accounts for five years from due date of filing annual return for the relevant year.
With GST subsuming a large number of indirect taxes and GST being a destination-based tax on consumption of goods or services, proper and appropriate accounting needs to be done.
Also, every person registered under GST is required to maintain books of accounts for five years from due date of filing annual return for the relevant year.

Tax Ledgers to be maintained under GST

• Input GST
• Output GST
• Input SGST
• Output SGST
• Input CGST
• Output CGST
• UTGST in lieu SGST (if entity is based in union territory)

What is impact of GST on profit & loss statement and balance sheet

GST being a tax component is neither an expense nor an income for business.
So, profit & loss statement is not affected by passing GST ledger.
But, wherever input credit is not allowable, its added in the cost of purchase of goods or services reducing profit or escalating loss.
In balance sheet input GST is shown under current asset and output GST under current liabilities.
In case of fixed assets, if input credit is allowed, value is shown net of GST.
Composition dealer are barred from selling outside the state as well as from charging GST from customers. Hence, they are not required to maintain input &output ledger. Rather GST paid by them is included in cost of goods & they pay at a fixed rate on supplies made.