Goods and Service Tax is an Indirect Tax, It has been replaced with various taxes. Which was introduced in India on 1st July 2017 and it was applicable throughout India.
The following are the GST tax types in India.
The SGST & CGST will be applicable incase of intra-state (Within State) supply goods or services.
The IGST will be applicable in case of inter-state (from one State to another state) supply of goods or services.
The GST has replaced below mentioned different types of indirect taxes.
CGST and SGST will attract on local sales, the below is the accounting entry for local sales.
Customer A/c Dr
To Sales A/c
To CGST A/c
To SGST A/c
IGST will attract on interstate sales, the below is the accounting entry for interstate sales.
Customer A/c Dr
To Sales A/c
To IGST A/c
Input tax credit means while paying GST for the particular period, the tax payer has to reduce input tax against output tax, which already paid on purchases or services received. In simple words if input GST is more than output GST called tax credit.
GST payable= GST collected on sales of goods or services – GST paid on purchase of goods or services
You have to set-off tax liability as per the below following order.
Input Tax Credit Set-off Against Liability
Central Tax Central tax integrated tax
Integrated Tax Integrated tax, central tax and state tax
State Tax State tax and integrated tax
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