Rakesh Munganiya
Brief :
Since GST is in place and has replaced old indirect taxation from 1 st July, 2017, new concept of RCM (Reverse Charge Mechanism) for buying from unregistered dealer and GST on advance received from the customer has made difficulties for most of the accountant. I have tried to cover all the scenario which helps to understand the exact flow of entries in the books.
Introduction :
Now a days every accountant is required to ensure correct accounting of the GST in the books which will would help at the month end to compile all the information for the purpose of the GST Return Filling and ERP plays an important role towards the same.
Main Body :
Every accountant is willing to know what should be correct flow accounting in GST which will help them to provide the information for GST return purpose and the Software Plays a key role for providing the correct information for return filling purpose and I have tried to provide the correct flow of accounting in GST which will be definitely be helpful for all the accountant.
The pain for GST accounting is RCM and Advance received from the customer otherwise all the entries which we used to do in the VAT regime is the same in the GST.
Obligation of GST on RCM and Advance received from the customer needs to fulfilled by paying to government by “Electronic Cash Ledger Only”
As threshold limit for registration in GST is very low i.e. 20 Lakhs (Rs. 10 Lakhs for north east area) therefore every registered person is required to understand the correct flow of accounting in GST which was not the earlist while situation.
Conclusion :
Registered person should comply with the GST and ERP should be able to provide the correct information and flow or accounting for all return filling purposes.
Suppose from one unregistered repairer if we pay his bill of charges, and collect 18% gst, additionally on reverse charge mechanisim, we will remit the same to GST. Can we claim any amount under cenvat credit under the above transaction.
It would have been beneficial if actual entries were given. Anyways, I am attempting hereunder.
1) For GST on Advance received :
Dr. GST on Adv. Receipts
Cr. GST payable
2) Adjustment of GST on Advance at the time of Invoice :
Dr. Customer
Cr. Sales
Cr. GST on Adv. Receipts (to the extent of GST paid on advance)
Cr. GST Liability on Sales (excess of GST charged in Invoice over that paid on Advance).
3) GST on RCM :
Dr. ITC receivable on RCM
Cr. GST payable as RC
Please note, all the above GST-related a/c.s are Balance-sheet a/c.s.