ENTRIES FOR PURCHASE
Normal Scheme
We get Input of Purchase, so we show Input in Purchase entry
Entry is
Purchase Dr
Input CGST Dr
Input SGST Dr
To Party
For Composition Scheme
We do not get any Input
So we pass Purchase Entry including tax
Purchase Dr
To Party
Example
Purchase Made 20000+500 CGST+500 GST from A
Entry in Normal Scheme will be
Purchase Dr 20000
Input CGST Dr 500
Input SGST Dr 500
To A 21000
Entry in Composition Scheme will be
Purchase Dr 21000
To A 21000
ENTRIES FOR SALES
In Normal Scheme, we charge GST From Customer
So in Entry, we show tax separately
Party Dr
To Sales
To Output CGST
To Output SGST
In Composition Scheme, we do not charge GST From Customer
So in Entry, we do not show tax
Party Dr
To Sales
Example
Sales Made 40000 (Including 5% tax)
Entry in Normal Scheme
Party Dr 40000
To Sales 38095
To Output CGST 952
To Output SGST 952
Entry in Composition Scheme
Party Dr 40000
To Sales 40000
Question
A Person purchases goods form Wholesaler at 100000+5% GST
He sells same for Rs 150000 to customer (tax inclusive)
What is tax Payable under Normal scheme or Composition Scheme?
View answer
Normal Scheme
|
|
AMT |
CGST |
SGST |
|
Output |
142857 |
3571 |
3571 |
|
|
|
|
|
|
Input |
100000 |
2500 |
2500 |
|
|
|
|
|
|
GST Payable |
|
1071 |
1071 |
Sample Invoice of Composition Scheme
|
|
AMT |
CGST |
SGST |
|
Output |
150000 |
750 |
750 |
|
|
|
|
|
|
Input |
|
0 |
0 |
|
|
|
|
|
|
GST Payable |
|
750 |
750 |
What is Profit earned in both schemes
View answer
For Normal Scheme
In Profit and Loss, We take Purchase and Sales without tax in P&L
Profit in Normal scheme=Sales-Purchase=142857-100000=42857
For Composition Scheme
In Profit and loss, we do not get any Input, so we take Purchase including tax in P&L
Also, Sales is Tax Inclusive, so we take Sales including tax in P&L
Also, Tax is an expense as we pay from own pocket and do not charge from customer
So, Profit in Composition Scheme=Sales-Purchase-Tax Expense=150000-105000-1500=43500
What is Entry for Purchase Sales in Normal Scheme
View answer
Purchase Dr 100000
Input CGST 2500
Input SGST 2500
To Party 105000
Party Dr 150000
To Sales 142857
To Output CGST 3571
To output SGST 3571
Output CGST 3571
Output SGST 3571
To Input CGST 2500
To Input SGST 2500
To GST Payable 2142
GST payable 2142
To Bank 2142
What is Entry for Purchase Sales in Composition Scheme
View answer
Purchase Dr 105000
To Party 105000
Party Dr 150000
To Sales 150000
Tax Exp Dr 1500
To CGST Payable 750
To SGST Payable 750