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Illustrations · Illustration 5

Q.Record necessary Journal entries in the books of Suman of Bihar assuming CGST @ 9% and SGST @ 9%: a. Bought goods ₹3,50,000 from Jharkhand.
b. Sold goods for ₹2,00,000 Uttar Pradesh.
c. Sold goods for ₹4,00,000 locally.
d. Paid Insurance premium ₹30,000.
e. Bought furniture for office ₹50,000.

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Inter-state (Jharkhand/UP) → IGST 18%; local (Bihar) → CGST 9% + SGST 9%. Input IGST ₹63,000 is set off first against output IGST, then CGST, then SGST. The final cash payment through the Electronic Cash Ledger is ₹30,600.

Concept — IGST vs CGST/SGST and the order of set-off

GST on an inter-state transaction is charged as a single Integrated GST (IGST); GST on a local transaction is split into CGST and SGST. The credit of input IGST is used first to set off IGST liability, then CGST, and finally SGST — in that order.

Solution — Books of Suman, Journal

No.ParticularsL.F.Debit (₹)Credit (₹)
(i)Purchases A/c Dr.3,50,000
Input IGST A/c Dr.63,000
  To Bank A/c4,13,000
(Being goods bought from Jharkhand — inter-state)
(ii)Bank A/c Dr.2,36,000
  To Sales A/c2,00,000
  To Output IGST A/c36,000
(Being goods sold outside the state)
(iii)Debtors A/c Dr.4,72,000
  To Sales A/c4,00,000
  To Output CGST A/c36,000
  To Output SGST A/c36,000
(Being goods sold on credit locally)
(iv)Insurance Premium A/c Dr.30,000
Input CGST A/c Dr.2,700
Input SGST A/c Dr.2,700
  To Bank A/c35,400
(Being insurance premium paid)
(v)Furniture A/c Dr.50,000
Input CGST A/c Dr.4,500
Input SGST A/c Dr.4,500
  To Bank A/c59,000
(Being furniture bought)
(vi)Output CGST A/c Dr.34,200
  To Input CGST A/c7,200
  To Input IGST A/c27,000
(Being set off against CGST output made)
(vii)Output SGST A/c Dr.7,200
  To Input SGST A/c7,200
(Being set off against SGST output made)
(viii)Output IGST A/c Dr.36,000
  To Input IGST A/c36,000
(Being set off against IGST output made)

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