How to Record GST Transactions in Accounts – Journal Entries

GST Accounting Entries

Accounting Treatment Under GST

The Goods and Services Tax (GST) has simplified the indirect system in India with the “one nation, one tax” approach. It has also streamlined the business and accounting processes, ensuring more transparency in business reporting and compliance.

In the GST regime, a taxpayer is required to maintain all types of accounts and records related to GST transactions such as Inward Supplies (Purchase), Outward Supplies (Sale), Production, Input Credit, Output Tax, Stock, Import-Export, Reverse charge, etc.

In this article, we will discuss the different types of business transactions related to GST and the journal entries of these transactions in the books of accounts or Accounting Software.

Pre-GST Scenario – Accounting Under VAT, CST, Service Tax, Excise

In the past tax scenario, there were different types of taxes for different business transactions and cross-utilization of input credit was not allowed. Therefore a taxpayer had to maintain separate ledger accounts for every tax law.

GST Regime – Types of Ledger Accounts to be Maintained Under GST

Under the GST regime, all indirect taxes will be subsumed in GST and there will be a dual GST Structure based on intra-state supplies and inter-state supplies. The CGST and SGST will be charged on intra-state supplies whereas the IGST (Integrated Goods and Services Tax) will be charged on all inter-state supplies. Therefore separate ledger account is required to be maintained related to CGST, SGST and IGST.

Journal Entries Under GST 

1. Purchase Transactions (Inward Supplies of Goods or Services)

A.Intra-State Purchase

Purchase A/c _____________ Dr.

CGST Input Credit A/c ____Dr.

SGST Input Credit A/c _______Dr.

To  Creditors A/c

B. Inter-State Purchase

Purchase A/c _____________ Dr.

IGST Input Credit A/c _______Dr.

To  Creditors A/c

2. Sale Transactions (Outward Supplies of Goods and Services)

A. Intra-State Supplies

Debtors A/c _____________Dr.

To Sales A/c

To CGST Payable A/c

To SGST Payable A/c

B. Inter-State Supplies

Debtors A/c _____________Dr.

To Sales A/c

To IGST Payable A/c

3. Set Off of Input Credit Against Outward Tax Liability of GST: GST Set Off Entry

Under the GST law, the set-off of input credit is allowed in the following order:-

GST Set-Off Chart-

gst set off rules

We can understand the order of input credit set off and its journal entries with an example:

Example – Month-End Details (Total Balances):

CGST Payable (Output) A/c   – Rs. 50,000

CGST Input Credit A/c   – 30000

SGST Payable (Output) A/c  – Rs. 50,000

SGST Input Credit A/c -30000

IGST Payable (Output) A/c    – Rs. 80000

IGST Input Credit A/c – 100000

GST Input Set Off At the End of the Month:

Total Outward Tax Liability50,00050,00080,000
CGST Credit Adjustments-
CGST Input30,000
SGST Credit Adjustments-
SGST Input30,000
IGST Credit Adjustments-
IGST Input20,00080,000
Total Tax Paid in Cash020,0000

Accounting Entries for GST Set off and Cash/Bank Payment

1. CGST Payable A/c__________ Dr.              50000

To CGST Input Credit A/c                                                  30000

To IGST Input Credit A/c                                                   20000

2. SGST Payable A/c__________ Dr.              50000

To SGST Input Credit A/c                                                  30000

To Electronic Cash Ledger A/c                                          20000

3. IGST Payable A/c__________ Dr.              80000

To IGST Input Credit A/c                                                   80000

Note: Electronic Cash Ledger is the online account (kind of e-wallet) maintained on the Government GST portal to pay GST in cash/bank.

4. Reverse Charge Transactions in GST

Normally liability to pay GST is on the supplier but the Government has notified certain supplies covered under the Reverse Charge Mechanism on which the liability to pay GST (partly or fully) is on the receiver of supply. In such case the accounting treatment will be as follows:

A. In the Books of Supplier

Debtor A/c   ____________________Dr.

To Sales A/c

To CGST Payable A/c (% of CGST Payable by Supplier, if any)

To SGST Payable A/c (% of SGST Payable by Supplier, if any)

B. In the Books of the Receiver 

Purchase A/c_____________________Dr.

CGST Input Credit A/c_______________Dr. (Total CGST on Input)

SGST Input Credit A/c_______________Dr.  (Total SGST on Input)

To Creditors A/c

To CGST Payable A/c (% of CGST Payable by Receiver Under RCM)

To SGST Payable A/c (% of SGST Payable by Receiver Under RCM)

Note: The above entries of reverse charge transactions are shown by assuming intra-State Supply. If there is inter-state supply then CGST and SGST a/c should be replaced with IGST a/c.

5. Refunds in Case of Export of Goods and Services:

Under GST law, the exports of goods or services are treated as Inter-State Supplies. In the case of export supplies, the exporter has two options:

A. Export Under Bond/LUT (Clear goods without payment of duty and claim the refund of Input credits): In this case, the exporter has to record the sale without charging any tax and determine the unutilized input credit of inputs for claiming the refund. The journal entry for the refund claim will be as follows:

CGST Refund Receivable A/c  _____________ Dr.

SGST Refund Receivable A/c  _____________ Dr.

IGST Refund Receivable A/c  _____________ Dr.

To CGST Input Credit A/c (unutilized input credit)

To SGST Input Credit A/c (unutilized input credit)

To IGST Input Credit A/c (unutilized input credit)

B. Export Under Rebate Claim (Clear goods with payment duty and claim the refund of duty paid on export goods): In this case, the sale will be recorded as follows:

Debtors A/c _____________Dr.

IGST Refund Receivable A/c______Dr.

To Sales A/c

To IGST Payable A/c


6. Imports under GST

Imports are treated as Inter-State supplies and therefore, IGST will be payable by the importer of goods or services. Further, the Customs duty is also applicable in the case of Import of Goods but the input credit of Custom duty is not allowed. Hence the importer can claim input credit of IGST and the Customs Duty will be added to   the cost of imported goods:-

Purchase A/c_________________Dr.

IGST Input Credit A/c ______________Dr.

To Creditor A/c

To IGST Payable A/c

To Custom Duty Payable A/c

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Q. Accounting Entries for GST Set off?

Here is a GST Set Off Entry Example-

1. CGST Payable A/c__________ Dr.              5000
To CGST Input Credit A/c                                                  3000
To IGST Input Credit A/c                                                   2000

2. SGST Payable A/c__________ Dr.              5000
To SGST Input Credit A/c                                                  3000
To Electronic Cash Ledger A/c                                          2000

3. IGST Payable A/c__________ Dr.              8000
To IGST Input Credit A/c                                                   8000

Q. How many times do I need to Maintain Accounts in GST?

Under the GST Act, every registered taxable person has to maintain the Books of Accounts and records for at least 72 months (6 years).
The period of 72 months will be started from the last date of filing the Annual Return for that year.

Q. Type of Records Maintained under GST?

You are required to maintain these records in GST-
1. Stock of goods
2. Inward and outward supply of goods and services 
3. Production or manufacture of goods
4. Input tax credit(ITC) availed
5. Output Tax Paid 

Q. What if I’m not Maintaining Account Records in GST?

If you fail to maintain accounts & records under GST, the proper officer has the power to create a liability on your unrecorded goods or services. 
Also, you have to pay a penalty which is Rs 10,000 or the Amount of TAX whichever is higher.  

Q. Documents Required for GST Registration?

These documents are compulsory for GST Registration-
1. Aadhar Card/PAN Card
2. Photograph
3. Business place Address Proof
4. NOC/Rent Agreement
Please read our article Documents Required for GST Registration for Proprietorship/Individual 

Q. Can we use multiple invoice series in GST?

Yes, you can use single or multiple invoice series under GST, the number of series can be a maximum number of 16. 
Also, you are required to start a new & unique invoice series number From the start of every Financial Year.   

Q. What type of account is GST?

GST is a Nominal Account. it does not represent any physical asset or liability.
The amount collected as GST is credited to the government account and is not used for any specific purpose. Hence, GST is considered a nominal account in accounting.

Prashant Vyas

Prashant Vyas is a Co-Founder of He is very passionate about Taxation and Personal Finance. he has more than 3 years of experience in the Taxation and Finance sector.


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  1. now i am purchase plant & machinery worth rs.35400/- ( basic value rs.30000/- + CGST Rs.2700 +SGST Rs.2700/- ) in tally ERP9 Latest Verson how it is entered and tax credit taken. Plant & Machinery already a/c in Tally under Fixed is shown in Purchase Account or through Journal Voucher entry. please clarify immediate and reply with entry

  2. what is the gst treatement if I purchase the materials from inter sate and sale it intra state . I know I need to pay igst for inter sate purchase and collect the cgst and sgst from intra state . my question is after sale how many tax I need to pay the government . I alrady pay igst while purchase the material from inter state.

    1. you will pay the difference between what you received at time of sale and what you payed at time of purchase. if you received more than you payed, you will pay the difference to government. if you payed more than you received, then the balance will be treated as an asset to the business and will be adjusted in future. Hope this helps!!

  3. Dear Sir,
    can I Know how to Pass RCM Intries
    Example for The Month We need to Pay RCM Payable Rs 1000000.
    For bank entry we pass As
    RCM Payable 10,00,000/- Dr
    To Bank 10 00 000/- cr
    Where as how to Declare in Books RCM Invoice which is Raise by us Equal Amount
    Kindly clarify.

  4. i got transtional credit on stock Rs 10,000 in cgst i was not excise dealer so i did nt have ane any excise ledger..what will be the journal entry of this??

  5. I want to account pre paid freight charges in my books
    on prepaid freight charges clearing agent is charging CGST & SGST.
    but the amount is nil. only i want to account TAX part how to account.

  6. Very usefull, but i have a doubt ….suppose i have surplus input credit then how will i show that?

  7. Sir what is the journal entry for if total output igst 55000 and input igst 90000.output cgst is 30000 input cgst 50000 and output sgst 30000 input sgst 50000