Purchase and Advance Payment with GST

Last updated at April 16, 2024 by

We know that Purchase Entry is of form
Purchase Dr
To Party
 
 
When Payment is Made to party, entry will be
Party Dr
To Bank
(Party is a Liability ,which decreases on making payment, so we debit it
Bank is an asset which decreases, so we credit it)
 
 
Normally First Goods Purchased, then Payment Made
So entry is
 
Purchase Dr
To Party
 
Party Dr
To Bank
 
Sometimes Payment Made in Advance, then goods Purchases
So entry will be
 
Party Dr
To Bank
 
 
Purchase Dr
To Party
 
Similarly, some amt Received in Advance, then goods Purchased, then amt Received 
So entry will be
 
 
Party Dr  20000
To Bank            20000
 
 
Purchase Dr 100000
To Party                 100000
 
 
Party Dr    80000
To Bank               80000
 
Similarly entries with GST will be as follows
 
 

purchase and Payment.jpg

 

Note
20% Advance and 20000 Advance is different
 
Lets take the following example-

Purchase comparision.jpg

Transcript

Purchase Local 5% Input CGST 2.5% 100000 2500 First Purchase then Payment Input SGST 2.5% To Party 2500 105000 20% Payment in Advance, then purchase, Then Balance Payment First Payment in Advance then Purchase Party To Bank 105000 105000 Party To Bank 105000 105000 Purchase Local 5% Input CGST 2.5% 100000 2500 Input SGST 2.5% To Party 2500 105000 Party To Bank 21000 21000 Purchase Local 5% Input CGST 2.5% 100000 2500 Input SGST 2.5% To Party 2500 105000 Party To Bank 84000 84000 Purchase and Payment Entries with GST Suppose Purchase is of 100000+% GST Purchase Local 5% Input CGST 2.5% 100000 2500 20% Payment in Advance, then Purchase, Then Balance Payment Input SGST 2.5% To Party 2500 105000 20000 Payment in Advance, then Purchase, Then Balance Payment Party To Bank 21000 21000 Party To Bank 84000 84000 Purchase Local 5% Input CGST 2.5% 100000 2500 Input SGST 2.5% To Party 2500 105000 Party To Bank 20000 20000 Party To Bank 85000 85000 Comparision

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.