Adjustment of Output & Input GST through Journal Voucher

Adjustment of Output & Input GST through Journal Voucher

We have lots of queries to do adjustment of Input and Output in a very easy manner. Adjustment entries provided in earlier post are not so difficult but as a beginner some people unable to pass those adjustment entries. So today we teach you very simple adjustment entries. As a basic nomenclature, out output liability is on Cr. side and Input credit is on Dr. Side, but reverse charge mechanism is on both side Dr. and Cr because 1st Reverse Charge Liability will be booked and after payment the same can be booked as input credit. So today we know this in very easy mode.

For Example, we purchase goods from Ravi Enterprises for Rs. 25000 and CGST and SGST thereon is Rs. 1500/- on each respectively @ 6% each. It means our Input Tax Credit is Rs. 3000 as CGST Rs. 1500/- and SGST Rs. 1500/-. Entry will be passed as follows:

Cr. Ravi Enterprises                 28000/-

Dr. Purchase A/c                                      25000/-

Dr. Central Tax                                          1500/- 

Dr. State Tax                                              1500/- 

Now we sold goods to Shekhar Products P Ltd. for Rs. 35000/- and CGST (Central Tax) & SGST (State Tax) is Rs. 2100/- on each respectively @ 9% each. It means our Output Liability is Rs. 4200 as CGST Rs. 3150/- and SGST Rs 3150/-. Entry of Sales Voucher will be passed as follows: 

Dr. Shekhar Enterprises Products P Ltd.                                          41300/-

Cr. Sales A/c                                                               35000/-

Cr. Central Tax                                                             3150/-

Cr. State Tax                                                                 3150/-

But remember if you use combine ledger for Output and input liability then your tax liability appear net in same ledger and then no need to pass another journal voucher. But if you are using seperate ledger for each input and output rate wise then you must need to create a journal voucher for generate tax liability. 

As in above case we have two type of rates of the product/ commodity. Purchase is @ 12% and Sales is @ 18%. 

When you file your GST Return there is a option called ledgers and you can find three types of ledger under this tab

You can see Electronic Cash Ledger, Electronic Credit Ledger and Electronic Liability Ledger.

Electronic Cash Ledger and Electronic Credit Ledger is working like a passbook.  Cash Ledger contains your all GST Payment month wise. Credit Ledger is contains your Input Credit Details month wise and Liability Ledger shows your monthly liability.

So if you use multiple tax rate for input and output GST tax then first you need to create the all three ledgers as above, 1. Cash Ledger, Credit Ledger and Liability Ledger.

First entry for your output settlement is:

Dr. Central Tax

Dr. State Tax

Dr. Integrated Tax

Cr. Liability Ledger

This entry will move your GST liability to your Liability ledger and balance with match with your Electronic Liability Ledger. 

Second Entry is Input Credit transfer to Credit Ledger:

Dr. Credit Ledger

Cr. Central Tax Input

Cr. State Tax Input

Cr. Integrated Tax Input 

This entry will move your GST Input Credit to your Credit ledger and balance with match with your Electronic Credit Ledger. 

3rd and last entry is Transfer your GST Payment to Cash Ledger. 

Dr. Cash Ledger

Cr. Cash / Bank

This entry will move your GST payment to your Cash ledger and balance with match with your Electronic Cash Ledger. 

For adjustment do below entry:

Dr. Liability Ledger

Cr. Credit Ledger

Use only input Credit amount which is used for setoff against liability. This entry will create your GST Tax Liability and make outstanding balance of GST Tax for making payment.

Next Entry will be

Dr. Liability Ledger

Cr. Cash Ledger.