E-Ledgers under GST: Electronic Cash, Credit, and Liability Ledger

Small and Medium Business owners and startup founders in India are required to comply with the Goods and Services Tax (GST) laws. One of the requirements of GST is maintaining electronic ledgers. E-ledgers under GST refer to electronic cash, credit, and liability ledgers that businesses must maintain to comply with the law.

What is an electronic cash ledger?

The electronic cash ledger is a ledger that businesses must maintain to pay GST liabilities. It is similar to a bank account where businesses deposit funds to pay off their tax liabilities. However, the electronic cash ledger is maintained electronically on the GST portal.

Businesses can deposit funds into the electronic cash ledger using various modes of payment, such as internet banking, debit card, credit card, NEFT, RTGS, and others. Once the funds are deposited, businesses can use the funds to pay off any tax liabilities, such as IGST, SGST, and CGST.

What is an electronic credit ledger?

The electronic credit ledger is another e-ledger that businesses must maintain. It is used to claim input tax credit (ITC) on GST paid on purchases made for business purposes. Businesses can use the ITC to offset their GST liabilities.

For instance, if a business purchases goods worth Rs. 1000 and pays GST of Rs. 180, it can claim an ITC of Rs. 180 in its electronic credit ledger. The business can then use the ITC to pay off its GST liabilities.

What is an electronic liability ledger?

The electronic liability ledger is a ledger that businesses must maintain to track their GST liabilities. It records the amount of GST liabilities that arise as a result of outward supplies made during a tax period.

When a business makes outward supplies, it must charge GST on the supply and pay the same to the government. The GST charged is called output tax. The business can claim input tax credit on GST paid on purchases made for business purposes.

However, if the output tax exceeds the input tax credit, the business must pay the difference to the government. The amount of tax payable is recorded in the electronic liability ledger. Businesses can use the funds in their electronic cash ledger to pay off their GST liabilities recorded in the electronic liability ledger.

Conclusion

Electronic ledgers under GST are mandatory for businesses to maintain. The electronic cash ledger is used to pay off tax liabilities, the electronic credit ledger is used to claim input tax credit, and the electronic liability ledger is used to track GST liabilities. Businesses must maintain these ledgers electronically on the GST portal to comply with the GST laws.