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Please suggest required gst entries for a bank while doing the following transactions.

18 May 2021

I want to know the entries that a Bank has to pass while doing the following things.

1) If a Bank "X" has provided insurance agent services to an insurance company and the Bank "X" will get paid from an insurance company by means of agent commission. To get this commission, Bank "X" has to raise a tax invoice for the services it provided to the insurance company and has to file gstr 1 of the concerned period. Here, what are the entries that Bank "X" have to pass in their books of accounts when raising this tax invoice or it doesn't need to pass any entries Please clarify in brief.

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Akshay Poriya ((artical assistant)) (313 Points)
Replied 18 May 2021

here, in the given case firstly for while rasing invoice pass entries as below:

INSURANCE COMPAMY A/C DR.

TO COMMISSION A/C CR.

TO CGST A/C CR.

TO SGST A/C CR.

( in case of intrastate supply within the state)

INSURANCE COMPANY A/C DR.

TO COMMISSION A/C CR.

TO IGST A/C CR.

( IN case of interstate supply outside the state)

while receiving money from insurance company pass following entry

CASH A/C DR.

OR,

BANK A/C DR.

TO INSURANCE COMPANY A/C CR.

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Shaik Abdul Raheem (37 Points)
Replied 18 May 2021

Originally posted by : Akshay Poriya
	here, in the given case firstly for while rasing invoice pass entries as below: INSURANCE COMPAMY A/C DR. TO COMMISSION A/C CR. TO CGST A/C CR. TO SGST A/C CR. ( in case of intrastate supply within the state) INSURANCE COMPANY A/C DR. TO COMMISSION A/C CR. TO IGST A/C CR. ( IN case of interstate supply outside the state) while receiving money from insurance company pass following entry CASH A/C DR. OR, BANK A/C DR. TO INSURANCE COMPANY A/C CR.

Here can I replace insurance company account with a commission receivable account. Please reply.

Akshay Poriya ((artical assistant)) (313 Points)
Replied 18 May 2021

Yes, you can replace the insurance company account with the commission receivable account.

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Shaik Abdul Raheem (37 Points)
Replied 18 May 2021

Thank you very much for your valuable reply sir.

Shaik Abdul Raheem (37 Points)
Replied 19 May 2021

Here we are debiting our receivables without getting payment from the company. I think it will be riskier if we didn't get payment from the insurance company. We have any other way to avoid debiting receivables or it's a must? Please clarify.

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Akshay Poriya ((artical assistant)) (313 Points)
Replied 20 May 2021

here, as per accounting standard -9 revenue recognisation if there is full certanity abount collection of money and all the risk and reward transfer to buyer then, recognise revenue forthwith, and not waiting for actully receipt of money. so, in the given case when service provided and raising of invoice then revenue recogniseto commision account . here it is must to debit either sundry receivables account or directly insurance company account,. here you can also make provision for doughtful debt. and it is used when actually bad debt accured. any further query or clarificate please ask again.