Sep 262017
 

Accounting Entries in case GST paid under Reverse Charge

Features of reverse charge mechanism of payment of tax on certain supply of services under GST:

The bulleted points of the above discussion are as below:

  • Reverse charge is a mode of collection of tax by government and not a different tax.
  • If goods and / or services are purchase from the registered taxable person – reverse charge levy can be effected only when goods and / or services traded are one of the specified items. Till date no such items are specified by central government.
  • Goods and / or services on which tax is payable under reverse charge are not exempted goods and / or services.
  • In case such goods are supplied by registered taxable person tax invoice shall be prepared by such supplier with the mentioned of the words – “TAX IS PAYABLE ON REVERSE CHARGE BASIS”
  • In case goods and / or services are supplied by unregistered person tax invoice will be generated by recipient taxable person under section 31(3)(f).
  • ITC of tax paid under RCM (reverse charge mechanism) will allowed once tax and value of supply is paid.

With the above background the accounting entry that can be passed is given below:

Accounting entry at seller end:

Whether supply is made by registered person or unregistered person –

XYZ party a/c                Dr

To Sale (under RCM) a/c

Accounting entry at purchaser end:

Mode 1 : Purchase made from registered person:

  • Tax will be paid by receiver of goods
  • Tax Invoice shall be prepared by supplier of goods / services
  • ITC will be available on tax paid
  • Payment voucher shall be prepared for every payment made

Accounting entry:

Purchase:

Purchase a/c                  Dr

Provisional ITC of CGST (under RCM)

Provisional ITC of SGST (under RCM)

To ABC Party a/c                 (For material purchase)

To CGST (under RCM)          (For CGST)

To SGST (under RCM)          (For SGST)

Availing ITC after fulfilling conditions:

ITC of CGST                  Dr

ITC of SGST                  Dr

To Provisional ITC of CGST (under RCM)

To Provisional ITC of SGST (under RCM)

Mode 1 : Purchase made from un-registered person:

  • Tax will be paid by receiver of goods
  • Tax Invoice shall be prepared by receiver of goods / services
  • No question of issuance of bill of supply as supply is not of exempted goods
  • ITC will be available on tax paid
  • Payment voucher shall be prepared for every payment made

Accounting entry:

Purchase:

Purchase a/c                  Dr

To ABC Party a/c                       (For material purchase)

 

Issue of tax invoice:

Provisional ITC of CGST (under RCM)

Provisional ITC of SGST (under RCM)

Memorandum sale a/c – crated only for the purpose of creating GST liability

To CGST (under RCM)    (For CGST)

To SGST (under RCM)    (For SGST)

To Memorandum sale a/c – crated only for the purpose of creating GST liability

 

Availing ITC after fulfilling conditions:

ITC of CGST                  Dr

ITC of SCST                   Dr

To Provisional ITC of CGST (under RCM)

To Provisional ITC of SGST (under RCM)

Sensys Technologies

  6 Responses to “Accounting Entries in case GST paid under Reverse Charge”

  1. DEAR SIR
    I MAI EAK TRANSPORT AGENCIE CHALATA HU AUR REGISTER PERSON KO GAGDI KIYAI PER DETA HU KYA MUJHAI GST 12% REGISTER PERSON SAI LANI HAI KYA AUR UNREGISTER KO BHI KIYAPAR DAITA HU,AUR RESISTER & UNREGISTER SAI BHI KIRAYA PER LAITA HU MUJHAI APANI ACCOUNTING KIS PARKAR KARNI HAI
    KARPYA MERI SAHAYTA KARAI

  2. dear sir

    REVERSE CHARGE ENTERY TALLY SO GSTR- 3B

  3. Hi sir

    We selling our goods X party 200000 /- the party recovers LD amount 13000 and IGST also how to entry posted into tally9

    • Dear Sir

      I have received service from unregistered transporters. I have entered our profit loss Account. Kindly guide me. then I have been paid RCM. And rcm reflect in gst Cash Ledger. will we have to less RCM Amount in freight account. Kindly explain me by example.

  4. Dear Sir,

    Today i am recd. commission bill more than 5 lakh with Gst please please advise how can i entry and Tds liability net value Or gross value.

    we do the needful
    thanks& regards

    72248-57877

  5. Dear Sir,
    suppose we received a commission from abroad and we are a agent in India and collect orders from India on behalf behalf of foreign principals.

    Received commission Rs. 100/ – in our bank A/c , in this condition we prepare sale invoice:\\
    foreign Principal as XYZ co 84.00 Dr
    IGST 18.00Cr
    commission received A/c 100.0 Cr

    can i am right?

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