Journal Entries Involving GST

Under India's Goods and Services Tax (GST) regime, most purchases and sales of goods/services carry GST, which must be recorded separately from the value of the goods themselves, because GST paid on purchases (Input GST) can be set off against GST collected on sales (Output GST) when remitting tax to the government.

For a transaction within the same state, GST is split into CGST (Central GST) and SGST (State GST), each normally at half the total GST rate; for a transaction between different states, a single IGST (Integrated GST) is charged at the full combined rate.

On a purchase (input side):

Purchases A/c …Dr. (value of goods)

Input CGST A/c …Dr.

Input SGST A/c …Dr.

To Cash/Creditor A/c (total including GST)

On a sale (output side):

Cash/Debtor A/c …Dr. (total including GST)

To Sales A/c (value of goods)

To Output CGST A/c

To Output SGST A/c …