How to maintain books for proper filing of GST Returns?

Anybody can maintain proper records of details required for filing GST returns, if they sort out the simplified elements required for GST. This article deals with how to maintain books for proper filing of GST Returns.

For almost all persons registered under Goods and Service Tax financial statements include two major aspects i.e Profit or Loss Account and Balance Sheet. The simplified elements revolve around these two aspects:

  • If we talk about Profit or Loss Account, the elements are Sales, Purchases, Debit Notes, Credit Notes, Other Income (on which GST is charged) & Expenses (on which GST Input Tax Credit is availed);
  • And for Balance Sheet, the main element is purchase or sale of Asset.

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Lets go to the detail discussion:

1. Common points for all the elements of GST Returns:

Important details required to be maintained for GST returns are:

  • Proper Invoice Number,
  • Name of Seller & Buyer,
  • Proper GSTIN of Seller & Buyer,
  • Right Quantity (should be reconciled with available stocks),
  • Correct Invoice Value,
  • Proper Reference of Original invoice (in case of Debit or Credit Note),
  • Proper Rate &Tax Value (CGST/SGST or IGST),
  • Transactions for Business Purposes (Not for personal),
  • HSN Codes (if applicable).

2. Important points for Purchases:

  • Reconcile with GSTR-2A before taking input in returns (GSTR-2A show sales shown by our suppliers which is our purchases)
  • It is advisable to take input which are reflecting in GSTR-2A & follow up with the party for inputs not reflecting in your GSTR-2A.
  • For Unclaimed Input Tax Credit, transfer the amount to a separate ledger viz. “Unclaimed ITC” in Current Asset, so as to keep a record on how much ITC you need to carry forward and avail in further months, when they will get finally reflected in GSTR-2A.

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3. Important point for Credit Notes/Debit Notes:

Credit Note: In simple terms, it is reduction of sales or increase in purchases.

Debit Note: in simple terms, it is reduction of purchases or increase in sales.

For Credit Note, where there is reduction in sales and for Debit Note, where there is reduction in purchases, following two points are important:

  1. Reference of Original Sales/Purchases (i.e. Sales/Purchases Invoice number, Date, Customer Name, GSTIN) must be correct.
  2. Credit Note/Debit Note value must be smaller or equal to Original Sales/Purchases amount.

If the above two points are not taken into consideration, it may make the Credit/Debit Note invalid.

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The author of above article is Pawan Pande.

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