Accounting entry in case of export & import of goods under GST
Accounting entry in case export:
Accounting entry for exports of goods is based on your choice of procedure adopted for taxation of supplies. Export supplies under GST are Zero rated. Under section 16 of the act a taxable supplier have either of the following two ways for taxing export supplies –
He may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit.
Under this mechanism exports needs to pay any tax at the time actual exports of goods and / or services and hence a simple sale entry will be made in the account.
However, what every inputs he have used for such supplies he might have pay GST on such inputs which may be claimed by him appropriate government by debiting appropriate authority accounting and crediting relevant input expense account as expenses to that extent are deducted.
He may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder
Under scheme would work as follows
Step 1. Pay tax at the time of export @ relevant IGST rate as application to goods / service.
Step 2. For paying IGST on such exports exported may utilized ITC available on inputs used for procuring / manufacturing such goods / service for exports.
Step 3. When export is done such exporter may claim refund of export duty from appropriate government.
Accounting entries will be passed accordingly
Accounting entry in case of import of goods
Accounting treatment of tax paid on import of goods co-exists with the eligibility of importer to claim ITC on goods import by him. In case importer is eligible to claim ITC accounting treatment for the same may be given as under:
At the time of payment of IGST on import:
Advance IGST on import a/c Dr
To Bank a/c
At the time of receipt of goods in store:
Import Purchase a/c Dr
BCD a/c Dr
Freight on import a/c Dr
Other import expenses a/c Dr
IGST on import Dr
To XYZ inc party a/c
To Import expenses – advance a/c
To advance IGST on import