GST Accounting Entries: 75+ Examples & Journal Guide

GST Accounting Entries: Complete Guide with 75+ Examples

Introduction: Why GST Accounting Demands Precision

Seven years after GST transformed India's indirect tax landscape, I still encounter businesses struggling with basic GST accounting entries. The confusion isn't about understanding GST—it's about recording it correctly.

Whether you're a CA student preparing for exams, an accountant managing compliance, or a business owner reconciling GST returns, getting these entries right is non-negotiable. One incorrect entry cascades into mismatched GSTR-1 and GSTR-3B filings, delayed refunds, and potential notices.

This guide provides 75+ practical examples covering every GST scenario you'll encounter—from simple local sales to complex reverse charge mechanisms. For foundational concepts, our guide on double-entry accounting explains the debit-credit principles underlying these entries.

Understanding GST Components

Before diving into entries, understand the three GST components:

Key Rule: Intra-state transactions attract CGST + SGST (split equally). Inter-state transactions attract only IGST (at combined rate).

For a complete understanding of GST terminology and structure, explore our dedicated guide.

Part 1: GST Entries for Purchases (Examples 1-25)

Intra-State Purchases (Within Same State)

Example 1: Basic Local Purchase

Scenario: Purchased goods worth ₹1,00,000 from a Delhi supplier (buyer also in Delhi). GST rate 18%.

Example 2: Local Purchase with Payment

Scenario: Same as above, paid immediately by bank.

Example 3: Purchase at 12% GST

Scenario: Raw materials purchased locally for ₹50,000 at 12% GST.

Example 4: Purchase at 5% GST

Scenario: Office supplies purchased for ₹20,000 at 5% GST locally.

Example 5: Purchase at 28% GST

Scenario: Air conditioner purchased for office ₹80,000 at 28% GST.

Inter-State Purchases (From Different State)

Example 6: Basic Inter-State Purchase

Scenario: Goods purchased from Gujarat supplier for ₹2,00,000. Buyer in Maharashtra. GST 18%.

Example 7: Inter-State Purchase at 12%

Scenario: Machinery parts from Tamil Nadu, value ₹1,50,000 at 12%.

Example 8: Capital Goods - Inter-State

Scenario: Plant & machinery purchased from Karnataka for ₹10,00,000 at 18% IGST.

Purchase Returns

Example 9: Local Purchase Return

Scenario: Goods worth ₹30,000 returned to local supplier. Original GST 18%.

Example 10: Inter-State Purchase Return

Scenario: ₹50,000 goods returned to out-of-state supplier. IGST 18%.

Reverse Charge Mechanism (RCM)

Example 11: RCM on Legal Services

Example 12: RCM on Goods Transport Agency

Scenario: Freight charges ₹40,000 from GTA. GST 5% under RCM (no ITC).

Note: At 5% GTA rate, ITC is not available. GST becomes cost.

Example 13: RCM - Unregistered Supplier

Scenario: Purchase from unregistered dealer ₹25,000. GST 18% payable under RCM.

Imports

Example 14: Import of Goods

Scenario: Imported machinery worth ₹5,00,000 (assessable value). IGST 18%, Customs Duty 10%.

IGST calculated on: ₹5,00,000 + ₹50,000 = ₹5,50,000 × 18% = ₹99,000

Example 15: Import of Services

Scenario: Consulting services from US firm ₹2,00,000. IGST 18% under RCM.

Purchases with Discounts

Example 16: Trade Discount on Purchase

Scenario: Goods ₹1,00,000, trade discount 10%, GST 18%.

GST calculated on net value after trade discount.

Example 17: Cash Discount on Purchase

Scenario: Invoice ₹1,18,000 (including 18% GST). Cash discount 2% received on payment.

At purchase:

On payment with discount:

Expenses with GST

Example 18: Rent Expense (Commercial)

Scenario: Monthly rent ₹50,000 for commercial property. GST 18%.

Example 19: Professional Fees

Scenario: CA audit fees ₹75,000. GST 18%.

Example 20: Telephone & Internet

Scenario: Monthly telecom bill ₹10,000. GST 18%.

Example 21-25: Various Expense Entries

21. Insurance Premium (18% GST): Debit Insurance A/c, CGST/SGST Input; Credit Insurer A/c

22. Advertising Expense (18% GST): Debit Advertisement A/c, CGST/SGST Input; Credit Agency A/c

23. Repairs & Maintenance (18% GST): Debit Repairs A/c, CGST/SGST Input; Credit Service Provider A/c

24. Security Services (18% GST under RCM): Debit Security Expense A/c, CGST/SGST Input RCM; Credit Security Agency + GST Payable RCM

25. Courier & Logistics (18% GST): Debit Courier Charges A/c, CGST/SGST Input; Credit Courier Company A/c

Part 2: GST Entries for Sales (Examples 26-50)

Intra-State Sales

Example 26: Basic Local Sale

Scenario: Sold goods worth ₹2,00,000 to customer in same state. GST 18%.

Example 27: Cash Sale - Local

Scenario: Cash sale ₹50,000 at 12% GST.

Example 28: Sale at 5% GST

Scenario: Essential goods sold for ₹80,000 locally at 5%.

Example 29: Sale at 28% GST

Scenario: Luxury item sold for ₹3,00,000 locally.

Inter-State Sales

Example 30: Basic Inter-State Sale

Scenario: Goods sold to customer in another state for ₹5,00,000 at 18%.

Example 31: Inter-State Sale at 12%

Scenario: Products worth ₹1,50,000 sold to buyer in different state.

Example 32: Sale to SEZ Unit

Scenario: Supply to SEZ unit ₹4,00,000. Zero-rated supply.

Note: SEZ supplies are zero-rated. GST not charged but ITC available.

Export Sales

Example 33: Export Under LUT (Without Payment of IGST)

Scenario: Export of goods ₹10,00,000 under Letter of Undertaking.

Zero-rated supply. ITC can be claimed as refund.

Example 34: Export With Payment of IGST

Scenario: Export ₹8,00,000 with IGST payment (for refund claim).

Sales Returns

Example 35: Local Sales Return

Scenario: Customer returns goods worth ₹40,000. Original GST 18%.

Example 36: Inter-State Sales Return

Scenario: Out-of-state customer returns ₹60,000 goods. IGST 18%.

Sales with Discounts

Example 37: Trade Discount on Sale

Scenario: Sale ₹1,00,000, trade discount 15%, GST 18%.

Example 38: Post-Sale Discount (Credit Note)

Scenario: ₹10,000 discount given after sale via credit note. GST 18%.

Service Sales

Example 39: Consulting Services - Local

Scenario: Consulting fees ₹2,00,000 billed to local client. GST 18%.

Example 40: IT Services - Inter-State

Scenario: Software development services ₹5,00,000 to client in another state.

Examples 41-50: Various Sales Scenarios

41. Advance Received for Services:

42. Sale of Fixed Asset (18% GST): Debit Buyer A/c; Credit Fixed Asset A/c, CGST/SGST Output A/c, Profit on Sale (if any)

43. Works Contract Supply (12% GST): Debit Customer A/c; Credit Contract Revenue A/c, CGST/SGST Output A/c

44. Restaurant Services (5% GST, no ITC): Debit Customer A/c; Credit Food Sales A/c, CGST/SGST Output A/c

45. Hotel Accommodation (12%/18% based on tariff): Debit Guest A/c; Credit Room Revenue A/c, CGST/SGST Output A/c

46. E-commerce Sale through Aggregator: Debit Aggregator A/c; Credit Sales A/c, CGST/SGST Output A/c (TCS deducted separately)

47. Sale with Packing Charges: Include packing in taxable value; single entry for total amount plus GST

48. Sale with Installation Services: Combined supply; GST on total value

49. Job Work Services (12% GST): Debit Principal A/c; Credit Job Work Income A/c, CGST/SGST Output A/c

50. Commission Income: Debit Principal A/c; Credit Commission Revenue A/c, CGST/SGST Output A/c

For practical application in accounting software, review our Tally interview questions covering GST compliance features.

Part 3: Input Tax Credit (ITC) Entries (Examples 51-60)

ITC Utilization

Example 51: Setting Off CGST Output Against CGST Input

Scenario: CGST Output ₹50,000, CGST Input ₹35,000.

Balance CGST payable: ₹15,000

Example 52: Complete ITC Set-Off (Intra-State)

Scenario: CGST Output ₹1,00,000, SGST Output ₹1,00,000, CGST Input ₹80,000, SGST Input ₹80,000.

Balance payable: CGST ₹20,000 + SGST ₹20,000

Example 53: IGST Input Against CGST/SGST Output

Scenario: CGST Output ₹30,000, SGST Output ₹30,000, IGST Input ₹50,000.

Order of utilization: IGST Input → IGST Output → CGST Output → SGST Output

Balance payable: CGST ₹5,000 + SGST ₹5,000

Example 54: Cross-Utilization of ITC

Scenario: IGST Output ₹40,000, CGST Input ₹25,000, SGST Input ₹25,000.

CGST Input balance: ₹5,000, SGST Input balance: ₹5,000 (carry forward)

ITC Reversal

Example 55: ITC Reversal - Non-Business Use

Scenario: Goods worth ₹20,000 (GST ₹3,600 claimed) used for personal purpose.

Example 56: ITC Reversal - Exempt Supply

Scenario: Common ITC of ₹50,000 to be reversed for exempt supplies (Rule 42).

Example 57: ITC Reversal - Non-Payment Within 180 Days

Scenario: Supplier not paid within 180 days. ITC ₹18,000 to be reversed.

ITC can be reclaimed on payment.

Example 58: ITC Reclaim After Payment

Scenario: Payment made to supplier. Reclaiming reversed ITC of ₹18,000.

ParticularsDebit (₹)Credit (₹)

Example 59: Blocked ITC - Motor Vehicle

Scenario: Car purchased ₹10,00,000 with ₹1,80,000 GST. ITC blocked.

GST capitalized to asset cost as ITC not available.

Part 4: GST Payment & Refund Entries (Examples 60-70)

Example 60: Blocked ITC - Food & Beverages

Scenario: Staff party expenses ₹50,000 with ₹9,000 GST. ITC blocked under Section 17(5).

GST included in expense as ITC not available under Section 17(5).

GST Payment Entries

Example 61: Depositing to Electronic Cash Ledger

Scenario: Depositing ₹1,00,000 to GST electronic cash ledger via challan.

ParticularsDebit (₹)Credit (₹)

Example 62: GST Liability Payment - CGST Only

Scenario: Paying CGST liability ₹45,000 from electronic cash ledger.

Example 63: Complete Monthly GST Payment

Scenario: Monthly GST payment after ITC set-off: CGST ₹30,000, SGST ₹30,000, IGST ₹20,000.

Example 64: Interest on Late GST Payment

Scenario: Interest ₹5,000 charged for delayed GST payment under Section 50.

Example 65: Late Fee for Delayed Filing

Scenario: Late fee ₹2,000 (₹1,000 CGST + ₹1,000 SGST) for delayed GSTR-3B.

GST Refund Entries

Example 66: Refund Application - Accumulated ITC (Exporter)

Scenario: Export business files refund claim for accumulated ITC ₹2,50,000.

Example 67: GST Refund Received in Bank

Scenario: Refund of ₹2,50,000 credited to bank account after processing.

Example 68: Partial Refund - Balance Rejected

Scenario: Claimed ₹1,00,000 refund; received ₹80,000; ₹20,000 rejected by department.

Example 69: IGST Refund on Exports (With Payment of Tax)

Scenario: IGST ₹1,80,000 paid on exports now received as refund.

Example 70: RCM Liability Payment

Scenario: Paying Reverse Charge liability: CGST ₹15,000, SGST ₹15,000.

For understanding how GST reconciliation fits into broader financial processes, see our bank reconciliation statement guide.

Part 5: Special Scenarios & Adjustments (Examples 71-77)

TDS & TCS Under GST

Example 71: TDS Deducted by Government Department (Section 51)

Scenario: Government department pays ₹5,00,000 for supply, deducts 2% TDS.

Calculation:

• Invoice value (including GST): ₹5,00,000
• Taxable value: ₹4,23,729 (₹5,00,000 ÷ 1.18)
• CGST @9%: ₹38,136
• SGST @9%: ₹38,135
• TDS @2% on taxable value: ₹8,475

In Supplier's Books:

Example 72: TCS by E-commerce Operator (Section 52)

Scenario: Seller makes ₹2,00,000 sale through Amazon. TCS @1% applicable.

In Seller's Books:

When Amazon remits (after TCS deduction):

TCS credit reflects in electronic cash ledger for GST payment.

Composition Scheme Entries

Example 73: Sale Under Composition Scheme

Scenario: Composition dealer (1% rate) sells goods worth ₹3,00,000.

At the time of sale:

Note: Composition dealers cannot charge GST separately on invoices.

Quarterly composition tax liability:

On payment:

Debit Notes & Credit Notes

Example 74: Debit Note Issued to Customer

Scenario: Price revision - additional ₹25,000 charged to customer. GST 18%.

Example 75: Credit Note Received from Supplier

Scenario: Supplier issues credit note for ₹15,000 due to quality defect. GST 18%.

ITC previously claimed must be reversed.

Other Special Scenarios

Example 76: GST on Free Samples/Gifts

Scenario: Marketing samples worth ₹10,000 (cost) distributed. Market value ₹12,000. GST 18%.

GST payable on open market value for gifts/samples to unrelated parties.

Example 77: Annual Return Adjustment (GSTR-9)

Scenario: During GSTR-9 preparation, additional output liability of ₹50,000 identified.

On payment of additional liability:

For comprehensive GST interview preparation, explore our detailed question bank.

GST Ledger Accounts: Complete Reference

Asset Ledgers (Debit Balance)

Liability Ledgers (Credit Balance)

Frequently Asked Questions

How do I record GST on purchases from unregistered dealers?

When purchasing from unregistered dealers, GST applies under Reverse Charge Mechanism (RCM) for specified goods/services. Record the purchase at base value, then create two separate entries: (1) GST Input under RCM as debit, and (2) GST Payable under RCM as credit. You pay the GST directly to the government and can claim ITC in the same month if the purchase is for business use. Example: Purchase ₹10,000, GST 18% → Debit Purchase ₹10,000, Debit CGST Input RCM ₹900, Debit SGST Input RCM ₹900, Credit Supplier ₹10,000, Credit CGST Payable RCM ₹900, Credit SGST Payable RCM ₹900.

What is the journal entry for GST refund on exports?

For exports under Letter of Undertaking (LUT), record the sale without GST output. To claim ITC refund: Debit GST Refund Receivable A/c, Credit CGST/SGST/IGST Input A/c. When refund is credited: Debit Bank A/c, Credit GST Refund Receivable A/c. For exports with IGST payment, record IGST Output at time of sale, create IGST Refund Receivable when filing refund application, and clear receivable when amount is received in bank.

How to pass entry for GST TDS deducted by government?

When a government department deducts 2% TDS on your supply, record the net amount received in bank, create GST TDS Receivable for the deducted amount, and credit Sales and GST Output accounts for full invoice value. The TDS receivable reflects in your electronic cash ledger on the GST portal after the deductor files their return, which you can use for future GST payments.

What entries are required for composition scheme dealers?

Composition dealers cannot charge GST on invoices, so sales are recorded at gross value without separate GST entries. At quarter-end, calculate composition tax (0.5% to 6% based on business type) on total turnover and record: Debit Composition Tax Expense, Credit CGST Payable (Composition) and SGST Payable (Composition). On payment, debit the payable accounts and credit Bank/Cash.

How do I account for ITC reversal under Rule 42 and 43?

Rule 42 applies to common ITC for taxable and exempt supplies. Calculate the proportionate ITC attributable to exempt supplies and reverse it: Debit Cost of Exempt Supplies (or ITC Reversal Expense), Credit CGST/SGST/IGST Input A/c. Rule 43 applies to capital goods used for both taxable and exempt supplies—reverse proportionate ITC based on exempt turnover ratio. Review and adjust these reversals annually in GSTR-9.

What is the entry when GST rate changes mid-transaction?

When GST rate changes between contract date and supply date, apply the rate applicable at time of supply. If advance was received at old rate and supply happens at new rate, adjust the difference: For rate increase, record additional GST output; for rate decrease, issue credit note and reverse excess GST collected. Always refer to transition provisions for rate change scenarios.

GST Reconciliation Checklist

Before filing returns, reconcile these items monthly:

For detailed reconciliation techniques, see our bank reconciliation statement guide.

Key Takeaways

• ✅ Separate ledgers for each GST component - CGST, SGST, IGST must be tracked individually
• ✅ RCM requires dual entries - Both liability and input entries are mandatory
• ✅ Follow ITC utilization order - IGST first, then CGST/SGST (no cross-utilization between CGST and SGST)
• ✅ Blocked ITC = Expense/Asset - Include GST in cost for Section 17(5) items
• ✅ Reverse ITC within 180 days - Track supplier payment dates carefully
• ✅ Reconcile monthly - Match books with GST portal before filing
• ✅ Document everything - Maintain audit trail for all GST entries

Closing Remarks

When GST was introduced on July 1, 2017, I remember the chaos in my clients' offices. Ledgers were being restructured overnight, accountants were scrambling to understand CGST versus SGST, and the term "input tax credit" suddenly became the most discussed phrase in every finance meeting.

Seven years later, the dust has settled—but the importance of accurate GST accounting has only intensified.

I've seen businesses lose lakhs in legitimate ITC claims simply because their accountants didn't understand the set-off sequence. I've witnessed assessment orders running into crores because RCM entries were missing. And I've helped countless professionals untangle the mess created by incorrect place-of-supply determinations.

The 77 examples in this guide aren't theoretical constructs—they're drawn from real scenarios I've encountered across manufacturing units, service companies, exporters, and e-commerce sellers. Each entry represents a potential compliance pitfall or an opportunity for proper tax management.

Here's what I want you to take away:

GST is not just an accounting exercise—it's a cash flow strategy. Every day you delay claiming legitimate ITC is a day your working capital suffers. Every incorrect entry is a potential interest liability waiting to surface during assessment.

Reconciliation is non-negotiable. The GST portal knows what your suppliers have reported. If your books don't match, you're either leaving money on the table or inviting scrutiny. Make GSTR-2A/2B reconciliation a monthly ritual, not an annual scramble.

Technology is your ally. Whether you use Tally, SAP, or any other ERP, configure your GST settings correctly from day one. The examples in this guide should translate directly into your software workflows.

For students preparing for CA, CMA, or other professional examinations, these entries will appear in your papers—sometimes directly, sometimes wrapped in complex scenarios. Master the fundamentals, and you'll navigate any variation the examiners throw at you.

Keep your ledgers clean. Keep your reconciliations current. And never underestimate the power of getting the basics right.

About the Author

Vicky Sarin, CA brings over 25 years of post-qualification experience in audit, taxation, and financial advisory. An alumnus of INSEAD's International Leaders Programme for Senior Executives (ILPSE), he has guided businesses through multiple tax regime transitions—from VAT to GST, from manual compliance to digital filing.

His expertise spans direct and indirect taxation, statutory audits, internal controls, and financial restructuring across manufacturing, services, and trading sectors. 

Connect with Vicky on LinkedIn

External Resource: For global perspectives on indirect taxation and professional accounting standards, visit ACCA Global's Technical Resources.