GST input tax credit adjustments
This article explains the requirement and process of GST credit adjustment.
- Credit Adjustment Journal
- Credit Adjustment for Reverse Charge Transactions
- Credit Adjustment Entry Process
Credit adjustment journal
Credit adjustment journal is designed to handle certain credit adjustments arising as an outcome of reconciliation.
Purpose of Credit Adjustments
Nature of Adjustment Purpose of Adjustment Credit Reversal To reverse the availed credit for posted transactions. Detailed GST Ledger entries and Detailed Cr. Adjustment entries are updated with Credit Adjustment type as ‘Credit Reversal’. Detailed Cr. Adjustment Entries are created with ‘Credit Availed’ as FALSE and ‘Liable to Pay’ as TRUE. Credit Re-availment To reavail the reversed credit for posted transactions. Detailed GST Ledger entries and Detailed Cr. Adjustment entries are updated with Credit Adjustment type as ‘Credit Re-Availment’. Detailed Cr. Adjustment Entries are created with ‘Credit Availed’ as TRUE and ‘Liable to Pay’ as FALSE. Permanent reversal To reverse a transaction permanently. Detailed GST Ledger entries and Detailed Cr. Adjustment entries are updated with Credit Adjustment type as ‘Permanent Reversal’. Detailed Cr. Adjustment Entries are created with ‘Credit Availed’ as FALSE and ‘Liable to Pay’ as FALSE. Need for Adjustment
Nature of Adjustment Need for Adjustment Credit Reversal If provisional credit is availed and credit remains unmatched, then after a prescribed period, the credit gets autoreversed in Credit ledger of GSTN Portal. To reverse such credit availment in the books of account and posted to respective GST mismatch account. Credit Re-availment If credit is reversed due to the reason that vendor payment isn't made within 180 days or for any other reason. Subsequently, if the vendor payment is made, then the reversed credit can be reavailed. Hence, to reavail the credit and post it to respective GST Receivable account. Permanent reversal If it's certain that the vendor will never upload the invoice information in GSTN portal, then the credit posted to respective GST Mismatch Account and post the same into respective GST expense account. Accounting Entries
Nature of Adjustment Document Type Debit Credit Credit Reversal Invoice GST Credit Mismatch Account GST Payable Account Credit Reversal Credit Memo GST Payable Account GST Credit Mismatch Account Credit Re-Availment Invoice Receivable Account GST Mismatch Account Credit Re-Availment Credit Memo GST Mismatch Account Receivable Account Permanent Reversal Invoice GST Expense Account GST Mismatch Account Permanent Reversal Credit Memo GST Mismatch Account GST Expense Account
Hinweis
Use Credit Re-Availment or Permanent Reversal after a Credit Reversal adjustment. Permanently reversed amounts aren't available for reavailment. For partial adjustments, eligibility depends on the remaining adjustment amount, not just the entry's latest adjustment type.
GST credit adjustment for reverse charge transactions
Credit Adjustment Journal functionality is also available for adjusting reverse charge transactions where GST Group Type is 'Service'. This functionality is designed to handle certain adjustments arising on selecting GST Credit Type incorrectly at the time of transaction.
Purpose of Credit Adjustments for Reverse charge transactions
Nature of Adjustment Purpose of Adjustment Credit Reversal To reverse the availed credit for posted transactions. Detailed GST Ledger entries and Detailed Cr. Adjustment entries are updated with Credit Adjustment Type as ‘Credit Reversal’. Detailed Cr. Adjustment Entries are created with ‘Credit Availed’ as FALSE and ‘Liable to Pay’ as TRUE. Credit Re-Availment To reavail the reversed credit for posted transactions. Detailed GST Ledger Entries and Detailed Cr. Adjustment entries are updated with Credit Adjustment Type as ‘Credit Re-Availment’. Detailed Cr. Adjustment Entries are created with ‘Credit Availed’ as TRUE and ‘Liable to Pay’ as FALSE. Credit Availment Avails credit that wasn't availed in the posted transaction. The adjustment type is Credit Availment. Detailed credit adjustment entries have Credit Availed selected and Liable to Pay cleared. Reversal of Availment Reverses a previous Credit Availment adjustment. The adjustment type is Reversal of Availment. Detailed credit adjustment entries have Credit Availed cleared and Liable to Pay selected. Need for Adjustment
Nature of Adjustment Need for Adjustment Credit Reversal If GST Credit is selected as Availment in transactions and later on realized that it has been incorrectly selected, then this adjustment allows to reverse credit and post it to respective GST Payable Account. Credit Re-Availment Reavails a previously reversed amount for a transaction whose original GST Credit was Availment. The amount posts to the GST receivable account. Credit Availment Avails credit for a transaction whose original GST Credit was Non-Availment. The amount posts to the GST receivable account. Reversal of Availment Reverses entries posted by Credit Availment. The adjustment posts to the expense or acquisition account and the GST payable account, as shown below. Accounting Entries
Nature of Adjustment Document Type Line Type Debit Credit Credit Reversal Invoice G/L Account G/L Account selected in transaction GST Payable Account Credit Reversal Invoice Item Respective Purchase Account GST Payable Account Credit Reversal Invoice FA FA Acquisition Account GST Payable Account Credit Re-Availment Invoice G/L Account Receivable Account G/L Account selected in transaction Credit Re-Availment Invoice Item Receivable Account Respective Purchase Account Credit Re-Availment Invoice FA Receivable Account FA Acquisition Account Credit Availment Invoice G/L Account Receivable Account G/L Account selected in transaction Credit Availment Invoice Item Receivable Account Respective Purchase Account Credit Availment Invoice FA Receivable Account FA Acquisition Account Reversal of Availment Invoice G/L Account G/L Account selected in transaction GST Payable Account Reversal of Availment Invoice Item Respective Purchase Account GST Payable Account Reversal of Availment Invoice FA FA Acquisition Account GST Payable Account
Hinweis
- GST Credit Adjustment Journal can be posted as Credit Re-Availment after posting GST Adjustment Journal for Type Credit Reversal.
- GST Credit Adjustment Journal can be posted as Reversal of Availment after posting GST Adjustment Journal for Type Credit Availment.
- Permanent Reversal isn't applicable for reverse charge transactions.
- The Credit Adjustment for reverse charge transactions can be executed only for GST Group Type as 'Service'. The GST credit and liability for reverse charge transactions, where GST Group Type is 'Service' is realized only on application of payment. System filters application entries in GST Credit Adjustment Journal for reverse charge scenarios.
GST credit adjustment entry process
- [!INCLUDE [open-search](../../includes/open-search.md)] GST Credit Adjustment, and then choose the related link.
- GST Credit Adj. Jnl Nos. shouldn't be blank on General Ledger Setup.
- GST Credit Adjustment Journal shouldn't be blank on Source Code Setup.
Select relevant information for following fields in GST Credit Adjustment Journal
Field Description GST Registration No. Specify the GST registration number for which adjustment is to be done. Period Month Specify the relevant month of adjustment. Period Year Specify the relevant year of adjustment. Posting Date Specify the posting date of the adjustment entry. Vendor No. Specify the relevant vendor for which adjustment is to be done. Document No. Specify the document number for which adjustment is to be done. External Document No. Specify the vendor invoice reference number for which adjustment is to be done. Nature of Adjustment Specify the relevant nature of adjustment. Input Service Distribution Shows whether the registration is an input service distributor. Select a registration number that isn't marked as an input service distributor. Reverse Charge Specifies whether the adjustment will be done for Reverse Charge entry or not. Adjustment % Enter a percentage greater than zero and up to 100. The default is 100. Use a lower percentage for a partial adjustment. Once relevant values are selected on the request page, select on Apply Entries.
- Check the documents and values and select on Action > Posting > Dimensions or Line Dimension, fill the relevant dimensions and post the entry.
The Posting Date must be after the selected Period Month and Period Year. The selected period is an upper date limit for eligible entries, not a filter for only that month's transactions. Optional vendor and document filters narrow the entries.
For reverse charge adjustments, the journal selects service invoice application entries, not the original invoice entries. It excludes item charge entries, exempt entries, distributed entries, and input service distribution entries.
Hinweis
The statutory examples above explain the original adjustment scenarios. Confirm current credit eligibility and deadlines separately.