Accounting Process Under GST
Separate accounts have to be maintained for Excise,VAT,Service,etc.Here's a list of the few accounts currently any business has to maintain (apart from accounts like purchase ,sales stock).
- Excise Payable A/C (For Manufactures)
- Cenvat Credit A/C (For Manufactures)
- Output Vat A/C
- Input Vat A/C
- Input Service A/C
- Output Service A/C
Under GST all these taxes (Excise,VAT,Service tax) will get subsumed into one account
Accounts should be maintained as following
- Input CGST A/C
- Output CGST A/C
- Input SGST A/C
- Output SGST A/C
- Input IGST A/C
- Output IGST A/C
In GST Regime we can claim for the input tax of the expenses incurred for business like Consultation charges and furniture so the accounting procedure will different from the Pre GST Scenario,and we are using SGST A/C and CGST A/C for accounting process by dividing the tax rate in equal proportion and in below example we are considering 18% as Tax
In the Inter state scenario the Accounting process is different from the Pre GST Scenario, and here will account the Tax in IGST A/c for the Inter state transaction.
Please go through below example for easy understanding
In GST Scenario the claim of the Input Tax is entirely different from the previous scenarios , as now we can able to claim the input tax for the interstate purchase also. But here we need to follow some rules for taking the Input Tax.
In Case of the SGST Input Tax , First we will set-off with SGST Output liability and then balance with IGST Output liability, where we can't able to set-off with CGST Output liability.
In Case of the CGST Input Tax , First we will set-off with CGST Output liability and then balance with IGST Output liability, where we can't able to set-off with SGST Output liability.
In Case of the IGST Input Tax , First we will set-off with IGST Output liability and then Secondly we will use the input credit to adjust with CGST Output liablility and finally we will adjust with SGST Output Liability.
How GST Impact in our Financial Statement.
After the GST , we can see our cost of the material will be decrease due to seamless credit from the Inter state and Intra State purchase.
And also we can able to reduce our expenses by claiming the input tax in the invoice.
Finally the profitability of the organization also will increase after the GST Scenario.
Period of Retention of the Accounts
Every registered dealer need to maintain the books of accounts for five years from the due date of filing of annual return for the relevant year.
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