GST Account Rules vs. Best Practices

Dears, I have a customer in India. I would like to know how the community is dealing with input GST and output GST in the GL Accounts. Are you using separate account heads or same.


Option (1) For selling use oCGST, oSGST, oIGST and for buying iCGST, iSGST, iIGST? Or
Option (2) just using CGST, SGST, IGST? (dr/cr) and purchase and sales register

Are there any rules around it? I think Option (2) is good enough. Thanks for your help!

To be able to better control the usage you should follow option (1) since option (2) is going to create issues later.

Also at my end I have made sure Input Accounts are always in DEBIT and Output Accounts are always in CREDIT.

This ensures that users don’t post wrong JV into the accounts. In addition to the option(1) accounts there would be a need for 3 cash accounts as well like Cash CGST, Cash IGST and Cash SGST which again would be DEBIT accounts in terms of balance.

Thanks you @adityaduggal

Any real examples of issues that is created later? Would be great to get a bit deeper.

Could we not do this with just 1 account per each head for i/o ?

Why do we need the Cash GST account heads?

Thanks for your help & clarification.

In Option two you intend to use both debit and credit for CGST in one account hence you cannot set this single account in DR or CR only.

How would you do it? Suppose you have one account for CGST (input and output) then if you mark it as ONLY debit then there could be a case say on 1st July when your first sale is being made then this account gets into CREDIT. So its prudent and basic accounting to make 2 different accounts.

you can get away by not making Cash GST account heads but if you are looking at good compliance then it makes good accounting sense to have Cash GST accounts for each. Also the Cash Ledger on the GST website would be same as that of your Cash GST accounts in your cash book.