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Input vs out put gst treatment

Yasaswi Gomes new (Finance ) (4514 Points)

29 December 2022

Output gst - input gst = Gst payable

When you make a purchase, transaction is

Purchases Dr

Cgst Dr.

Payables Cr.

So does it mean that CGST debit balance is current asset or expense? Similarly for sales CGST is credit, then is it a liability?

Txs

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4 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 29 December 2022

Yes , If fact Input CGST and SGST Tax credit are Your Current Asset should be shown on Asset side in Balance Sheet, and Out put CGST and SGST Tax are your liability to pay .
At the end of the year , if any balance in Electronic credit ledger ( ITC ) should transfer to Balance with Revenue Authority A/c , Should be shown in Asset side.

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Yasaswi Gomes new (Finance ) (4514 Points)
Replied 30 December 2022

Great. So CGST debit from purchases entry is a current asset and CGST credit from sales entry represents a liability.. in the year end before paying taxes, we do output minus input cgst and that's current tax payables. When ITC = tax payable (output gst - input gst) why is ITC under current assets?

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 30 December 2022

Operating period of an Assets, usually within one year will be treated as Current Asset, So Input Tax credit which is benefit to business may or may not be available at the end of the year but it's Asset to business for current period, so it's current Asset .

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 30 December 2022

I have seen lots of business entitles showing Input CGST , SGST and IGST under Duties & Taxes , Lability side Balance sheet , May not be correct , but useful for Calculation .