The Goods and Services Tax (GST) has revolutionized the Indian tax system, bringing transparency and uniformity. GST is an indirect tax, and every business that is registered under GST has to maintain several accounts as per the GST laws. In this article, we will discuss the accounts that businesses need to maintain under the GST law.
To provide a better understanding, we shall divide these accounts into four categories. They are:
1. Accounts related to outward supplies
2. Accounts related to inward supplies
3. Accounts related to input tax credit (ITC)
4. Accounts related to payment of tax
These accounts are necessary for calculating the output tax liability of businesses. The following accounts are mandatory to be maintained:
a) Sales register - Every business that sells goods or services has to maintain a register of all the sales made. The register should contain the details of the buyer, the description of goods, the value of goods, tax rate, and the amount of tax charged.
b) Credit note register - A business that issues credit notes for goods returned by the buyer or for other reasons has to maintain a register of all such credit notes issued.
c) Debit note register - Similarly, a business that issues debit notes for goods supplied or services rendered has to maintain a register of all such debit notes issued.
d) Goods dispatch register - A business that dispatches goods to the buyer has to maintain a register of all the goods dispatched.
These accounts are essential for calculating the input tax credit of businesses. The following accounts are mandatory to be maintained:
a) Purchase register - Every business that purchases goods or services has to maintain a register of all the purchases made. The register should contain the details of the seller, the description of goods, the value of goods, tax rate, and the amount of tax paid.
b) Credit note register - A business that receives credit notes for goods returned or for other reasons has to maintain a register of all such credit notes received.
c) Debit note register - Similarly, a business that receives debit notes for goods supplied or services rendered has to maintain a register of all such debit notes.
d) Goods receipt register - A business that receives goods has to maintain a register of all the goods received.
ITC refers to the credit businesses can claim on the tax paid on purchases made. The following accounts are mandatory to be maintained:
a) ITC register - Every business that claims input tax credit has to maintain a register of all the input tax credits claimed.
b) Reversal register - A business that reverses the input tax credit has to maintain a register of all such reversals made.
These accounts help in calculating the amount of tax payable by businesses. The following accounts are mandatory to be maintained:
a) Cash ledger - Every business has to maintain a cash ledger showing the amount of tax payable or paid by it.
b) Credit ledger - A business that has excess tax paid has to maintain a credit ledger showing the amount of tax credit available.
c) Tax liability register - A business that has to pay tax has to maintain a tax liability register showing the amount of tax payable. This article discusses the accounts that businesses need to maintain under the GST law. It provides a comprehensive guide, dividing the accounts into four categories, and explains the importance of maintaining each account.
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