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GST as expense or income

see lee (Student) (102 Points)

14 July 2023

There is a government (client) bill on which GST amount is not paid to contractors,then after adjusting the ITC,balance GSTpayable on sales is paid by the contractor.Now Debtors dr balance is raised due to GST liability is now Closed With an expense account,is accounting acceptable?

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5 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 14 July 2023

You mean GST paid by the Receiver...
Right?

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see lee (Student) (102 Points)
Replied 14 July 2023

GST is paid by contractor for service provided to client( govt) and amount is not received from government,so the debtors balance(govt account)is having gst liability dr.balance and it is transferred to expense account to close the account.Contractor claimed ITC on that GST liability.is this accounting treatment correct?because next year if government releases the same GST amount it is treated as income.

sabyasachi mukherjee (27574 Points)
Replied 14 July 2023

Generally you hv to claim thru input tax credit.

Rajendra Prasad (Employee Private) (1867 Points)
Replied 14 July 2023

You have to keep the Debit balance as receivable, not to transfer any where. As and when received from Government the said account shall be nullified.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 14 July 2023

Originally posted by : see lee
	GST is paid by contractor for service provided to client( govt) and amount is not received from government,so the debtors balance(govt account)is having gst liability dr.balance and it is transferred to expense account to close the account.Contractor claimed ITC on that GST liability.is this accounting treatment correct?because next year if government releases the same GST amount it is treated as income.