Introduction



Under GST, taxpayers will not have to maintain ledgers manually. Instead GST electronic ledger will be maintained on the dashboard of the taxpayer by GSTN. In this article, we will talk about different types of GST electronic ledger such as Cash ledger, Input Tax Credit ledger, Tax Liability ledger and their working. These GST electronic ledger would be updated in real time on the performance of an activity in connection with these ledgers by the taxpayer. Both the ITC ledger and the Cash ledger can be utilized by the taxpayer for discharging the tax liabilities of the returns. Details in these GST electronic ledgers will get auto populated from previous tax period returns (irrespective of mode of filing return i.e. online/offline utility).


Different kinds of GST Electronic Ledger

1. Cash ledger

All the payments deposited via challan under the Minor Heads – Tax, Interest, Penalty, Fees and others of the respective Major Heads like CGST, SGST and IGST shall be credited under the electronic cash ledger of the taxpayer. Any utilization of the available credit towards payment with respect to liability arising out of the return or any other demand will be debited to such cash ledger.

Note:

  • The cash ledger will display balance as on date under various major-minor head combination will CGST Tax, CGST Interest, CGST penalty etc. which will be 15 in count (3 Major heads* 5 Minor heads = 15 Major-Minor heads columns

2. Input Tax Credit ledger

All the input taxes under various major heads i.e. CGSTSGST, and IGST shall be credited to electronic ledger also known as Input tax credit or ITC ledger in the following situations:

ITC for taxes paid on Inward supplies from registered taxpayers

  • Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of which the taxpayer becomes liable to pay tax provided he applies for registration within 30 days from the date of its liability
  • Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day of conversion from compounding taxpayer to normal taxpayer
  • ITC with respect to taxes paid under a reverse charge shall be credited to the Electronic credit ledger also known as Input tax credit ledger of the taxpayer.

Other Important Points

  • If the goods and/or services are used by the registered taxable person partly for the purpose of his business and partly for any other purposes, the amount of credit shall be allowed for the goods and/or services used for the purpose of his business.
  • If the goods and/or services are used by the registered taxable person partly for effecting taxable supplies and partly for effecting non-taxable supplies which are exempt and not zero-rated, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies.
  • In cases of change in the constitution of business of the registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed.
  • Input tax credit shall be available on provisional basis even when the supplier has not paid tax for a particular tax invoice.

Debit in Input tax credit ledger

Any utilization of the available credit for the following purposes shall lead to debit entry to the ITC ledger:

  • Utilization towards liability arising out of the return
  • Utilization against any demand notice received based on assessment
  • Credit reversal due to Mismatch of input tax credit
  • Lapse of input tax credit after expiry of one year from the date of issue of tax invoice relating to the inward supply

Note: Input tax credit ledger shall display the balance under respective Major heads like CGST, SGST, and IGST.

 3. Tax liability ledger

Tax liability ledger shall also be electronically maintained which will display the amount of liability arising out the regular return of the taxpayer or any other liability arising out of demand notice, penalty etc. and shall also display the amount of liability paid by utilization of the available credit balance in Cash ledger or Input tax credit ledger. Now let’s try to understand the transfer mechanism for cash ledger and electronic credit ledger:

GST electronic ledger

Payment of Tax

payment-of-tax

In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance