GST entries

When a business buys, it pays GST to its supplier. That is input tax. When it sells, it collects GST from its customer. That is output tax. Input tax is debited (it can be claimed back) and output tax is credited (it is owed to the government).

• Within one State (Delhi to Delhi): CGST + SGST, half each. Goods bought for ₹1,00,000 at 5% CGST + 5% SGST: Purchases Dr ₹1,00,000, Input CGST Dr ₹5,000, Input SGST Dr ₹5,000, To Cash (or the supplier) ₹1,10,000.
• Between States (Bihar to Uttar Pradesh): IGST in full: Purchases Dr, Input IGST Dr, To Cash or the supplier.

On a sale the entries are the other way round. Goods sold within Delhi on credit for ₹1,35,000 at 5% + 5%: Debtor Dr ₹1,48,500, To Sales ₹1,35,000, To Output CGST ₹6,750, To Output SGST ₹6,750.

At the end of the period, the tax collected is set off against the tax already paid, and only the difference is paid to the government, through the Electronic Cash Ledger. Output CGST ₹6,750 less input CGST ₹6,000 leaves ₹750 to pay (and the same for SGST).

The order of set-off matters. IGST credit is used first against IGST owed, then against CGST, then against SGST. CGST credit and SGST credit can never be used against each other: CGST pays only CGST (and IGST), and SGST pays only SGST (and IGST). Example: output CGST ₹36,000, less input CGST ₹7,200, less leftover IGST credit ₹27,000 used against it: CGST payable = ₹1,800.