Transitional Credit under GST & its Effect on Tax Audit

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Transitional Credit under GST & its Effect on Tax Audit:

This is the time when everyone is busy for finalizing his books for Tax Audit. Before finalizing   the books I want to draw your attention on Transitional Credit and its effect on Tax Audit. This is one thing which one may be able to be skip while finalizing the books. In this article, I will consolidated various Accounting entries which everyone should be required to check for different section under GST.

If Credit taken u/s 140(1) i.e. existing credit carried forward in GST and its accounting entries:

Pre GST Credit:                                                                    Post GST:

Particulars Amount Particulars Amount
Cenvat Credit in last Excise Returns 250 Input Credit available to CGST Credit Ledger

 

250
Input Credit available in Last Vat returns 350 Input Credit available to SGST Credit Ledger

(350 – 210)

140
Tax incidence of Non submitting of statutory forms (C form to be submitted for sale value of Rs.6,000/-)                    (5.5% -2%)

 

210  

 Accounting Entries:

Paticular Amount
Electronic Credit CGST Ledger A/c Dr 250
Electronic Credit SGST Ledger A/c Dr 140
      To Cenvat Credit A/c 250
      To Input Vat A/c 140

If Credit taken u/s 140(2) i.e. Non Avail credit on Capital Goods carry forward in GST and its accounting entries:

Pre GST:

Paticular Amount
Cenvat Credit available for Capital Goods

 

350
Input Tax Credit availed so far 175
Balance not available 175

Accounting Entries:

Paticular Amount
   Electronic Credit CGST Ledger A/c Dr 175
         To Input CENVAT Credit A/c 175

If Credit taken u/s 140(3) i.e. Deemed Credit on Closing Stock as on 30.06.2018 taken by trader (Excise Document is not available)

If anyone is taken the credit u/s 140(3) after satisfying the conditions specified in the section then following entries should be required to be passed t pass on the benefit to the customer.

Entry to be passed on sale of such goods:

Paticular Amount
Party Account      Dr

 

XXX
Transitional Discount Account Dr XXX
    To  Sales XXX
    To  CGST Liability Ledger Account XXX
    To  CGST Liability Ledger Account XXX

Entry to be passed for taking credit:

Paticular Amount
CGST Liability Ledger Account   Dr XXX
     To Transitional Discount Account XXX

For ease of understanding following is the example:

Particulars Amount
Base Price 5000
Add: CGST @6% 300
Add: SGST @6% 300
Total Value 5600
Less: Discount Eligible Credit@40% of CGST (120)
Selling Price 5480

Entry:

On Sale

Party Account      Dr

 

5480
Transitional Discount Account Dr 120
    To  Sales 5000
    To  CGST Liability Ledger Account 300
    To  CGST Liability Ledger Account 300

For taking Credit:

CGST Liability Ledger Account   Dr 120
     To Transitional Discount Account 120

If Credit taken u/s 140(3) i.e. Credit of Excise element in Closing Stock as on 30.06.2018 taken by trader (Excise Document is available)

Entry to be passed on sale of such goods:

Particular Amount
Electronic Credit CGST Ledger A/c Dr XXX
 To Purchases/ Sundry Income XXX

Above entries should be checked before finalizing the books of accounts and signing the reports. Your feedback and suggestions are valuable.

By  CA. Monika N Rathi


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