GST in Dynamics NAV 2016 - Whitepaper

Goods & Service Tax in NAV 2016Goods & Service Tax in NAV 2016
Contents
Goods and Services Tax ..........1
1. Key Areas of GST – Impact
on Product Design....................3
2. GST Setups.......................11
3. GST Fields in Masters..13
4. GST Fields in Purchase,
Sales Documents and General
Journals.......................................15
5. GST Ledger Entry and GST
Detailed Ledger Entry..........20
6. Purchases..........................25
7. Sales.....................................39
8. Advance Payment and its
Application to Invoice.........44
9. Service Management, Stock
Transfers and Transitional
Provisions ..................................60
10. GST Reconciliation &
Credit Adjustment Journal 63
11. GST Settlement & Posted
Reconciliation Table.............69
12. Document Reports ..78
13. Scope Exclusions for this
release .........................................79
14. Code Box Section.....80
Goods and Services Tax
This white paper provides detailed insight into development of
GST related features in Microsoft Dynamics NAV 2016.
The documentation starts by describing Key Areas of GST and
their Impact on the Product Design, GST related fields added in
Setups, Master and Documents.
Then it explains the Purchase and Sales scenarios, Advance
Payment and Application scenarios, Service Management, Stock
Transfers and Transitional Provisions.
Finally, it explains GST Reconciliation feature, Credit Adjustment
Journal and GST Reconciliation.

Goods & Service Tax in NAV 2016Goods & Service Tax in NAV 2016
1.Key Areas of GST – Impact on Product
Design
A. Basics of GST:
a. Proposed GST:
• Goods and Service Tax (GST) is an indirect tax levied on supply of goods or services or both.
• It is a destination/consumption based tax levy which is payable in the state in which the goods
and services are consumed.
• It is levied and collected on value addition at each stage of production or distribution process
(all points in supply chain).
• The supplier can avail credit on input tax credit paid on procurement of goods or services.
b. Components of GST:
Component Levied by Applicable on
Central GST (CGST) Centre Intra-state supply of goods or services in India
State GST (SGST) States Intra-state supply of goods or services in India
Integrated GST
(IGST)
Centre Inter-state supply of goods or services, Exports and
Imports
c. Goods outside the gamut of GST:
• Petroleum products and alcohol for human consumption are proposed to be kept out of GST
purview. Petroleum products will be brought into GST network at a later stage.
• Central Excise duty will continue on petroleum products. States will continue to impose sales
tax on sale of petroleum products and alcohol for human consumption.
• Tobacco products will be subject to excise duty along with GST.
B. Provisions of Draft Law, Draft Rules and Formats and Business Processes Documents
pertinent to GST Design in NAV
a. GST Registration Number:

Goods & Service Tax in NAV 2016
• Registration Number under GST is called Goods and Service Tax Payer Identification
Number (GSTIN). It is a state-wise PAN based 15-digit number the structure of which is as
follows:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
State
Code
PAN Entity
Code
Check
Digit
Blank
• First two digits represent the State codes. The next thirteen-digits are alphanumeric and are
assigned depending on number of registrations a legal entity (having the same PAN) has
within one state. (Provided business entities go for vertical wise registrations)
• All UN bodies seeking to claim refund of taxes would be required to obtain a Unique
Identification Number (UID) from GSTN portal. The supplier supplying to these organizations
is expected to mention UID in the respective invoices.
• Government authorities/PSUs not making outward supplies of GST goods (and thus not liable
to obtain GST registration) but are making inter-state purchases will be allotted Government
Department Unique ID (GID) from GSTN portal.
• The structure of both UID & GID are uniform across all the states in uniformity with GSTN
structure.
Relevance of GST Registration No. in the Product Design:
• GST Registration No. is defined by every state. This Registration No. can be selected in the
following pages:
➢ Company Information
➢ Locations Master
➢ Vendor Master
➢ Customer Master
• Validations are provided to ensure that the Registration No. entered is of 15-digits and is of
the same format as mentioned above. Moreover, the first two digits of the Registration No.
shall match with the state code defined in State code. Validation has been provided for these.
• GST Registration Type field in Customer master enables the user to select whether the
Registration No. is GSTIN, UID or GID.
b. HSN/SAC Codes:

• Harmonized System Nomenclature (HSN) is applicable for goods whereas Service Accounting
Codes (SAC) are applicable for services. These codes are meant to reduce the chances of
misinterpretation and helps in assigning correct tax rates to products and services. These HSN
codes will be similar to codes, which are being presently used in Central Excise Tariff schedules.
• Goods and Services are to be reported along with HSN and SAC codes in compliance Returns
(GSTRs).
• HSN codes comprises of eight digits. The number of digits to be mentioned in the GST Returns
is dependent on the turnover. If turnover exceeds five crores, it is mandatory to mention four-
digits. In case turnover is between 1.5 to 5 crores, it is mandatory to mention two-digits. For
exports and imports, it is mandatory to mention eight-digits. However, a taxpayer irrespective
of turnover may opt to use either six-digits or eight-digits.
Relevance of HSN/SAC Codes on the product design:
• A master has been provided where HSN/SAC codes for each GST Group code can be defined.
• HSN/SAC codes must also be selected in Items master and G/L Account card for each item
and service respectively.
• These codes also flow in purchase lines and sales lines, based on the item or service selected.
However, the user can edit the codes in the respective documents.
• System validates HSN/SAC codes at the time of applying an advance payment with an invoice
and allows you to apply if HSN code of the Advance Payment matches with any or all of the
HSN/SAC codes in purchase or sales lines.
• Purchase lines are clubbed based on either the HSN or SAC code for the purpose of
Reconciliation and disclosure in compliance returns (GSTRs).
c. Place of Supply:
• Place of Supply is the place where services are deemed to be provided or goods are deemed
to be sold as per GST Law. Place of Supply is critical in determining whether a transaction is an
interstate sale or intrastate sale.
• Place of Supply can be a Buyer’s Location, Seller’s Location or any other place where goods
are delivered or services are rendered.
• Place of supply provisions are different for goods and services in Model GST law. Within
services and goods, they may vary from service to service and goods to goods.

• Place of Supply for Goods:
Supply Place of supply
Involves movement of goods Where delivery terminates
Does not involve movement of goods Location of goods at the time of delivery to
recipient
Goods assembled or installed at site Place of such installation or assembly
Goods supplied onboard a conveyance Location at which such goods are taken onboard
Goods are delivered by the supplier to
recipient on direction of a third party
(Sale of goods in which three parties
are involved)
Principal Place of business of buyer.
• Place of Supply of Services (General)
Supply to a Place of supply
Registered person Location of such person.
Other than a registered person with
address on Record.
Location of such person.
Other than a registered person without
address on record.
Location of Supplier.
Apart from the above, Place of Supply has been specified in the IGST Draft Law, for
Specified services.
• Significance of Place of Supply
Place of Supply of goods determines whether a transaction is an inter-state supply or intra-
state supply.
Nature of Supply Condition Tax Applicable
Intra-state supply of
goods
When the location of supplier and
place of supply
are in the same state.
CGST
SGST
Inter-state supply of
goods
When the location of supplier and the
place of supply are in different states.
IGST
Impact of Place of Supply on Product design:
From system perspective, Place of Supply can be Bill to Address, Ship to Address or
Location Address. GST Dependency Type field has been created in Sales & Receivable
Setup with above three as a drop down. The option selected shall be construed as Place of
Supply for sale of all goods and services.
For any GST Group, if the Place of Supply is different from what is defined in GST
Dependency Type, then the same can be defined in GST Group Setup. If for a GST group,

Place of Supply is defined in GST Group Setup, then the same flows to GST Place of Supply
field in Sales lines. If it is not defined, then GST Dependency Type shall flow to GST Place of
Supply field in Sales lines. This GST Place of Supply field in Sales lines is a user editable field.
System validates shipping location state code and place of supply state code with GST
configuration setup for any matching line and triggers the tax accordingly.
Example: For Advertising Services, if Place of Supply is Ship to Address and the same is
defined in GST Group, then GST Place of Supply field in Sales lines is auto-populated with
Ship to Address. If the ship to address is, Karnataka and the shipping location is Tamilnadu,
and then system checks for matching line in the GST configuration set-up and triggers the tax
rate accordingly.
• Place of Supply can also be defined for each GST Group. Place of Supply is critical in
determining whether it is an interstate sale or intrastate sale. Place of Supply can be Bill to
Address, Ship to Address or Location address.
• If Place of Supply is not defined in the GST Group, then system considers GST Dependency
type defined in Sales & Receivable Set-up as Place of Supply.
d. Time of supply:
• Time of supply provisions of Model GST Law contemplates when the liability to pay GST arises.
This point in time is different for goods, services and for goods and services which are subject
to Reverse charge.
• Time of Supply for goods & Services: Invoice date or Receipt of Payment whichever is earlier
• Time of Supply for goods subject to reverse charge:
➢ The date of receipt of goods
➢ The date of payment
➢ The date immediately following thirty days from the date of issue of invoice by the
supplier.
• Time of Supply for services subject to reverse charge:
➢ The date immediately following thirty days from the date of issue of invoice by the
supplier.
• Time of Supply for Associated Enterprises:
➢ The date of entry in the books of account of the recipient
Relevance of Time of Supply in product design
• Time of Supply is relevant for creation of General Ledger entries. It determines when Payable
Account shall be credited in accounting entries.

• For Sales transactions, liability to pay tax arises on invoice date or date of payment whichever
is earlier. Hence, at the time of receipt of advance, Payable account shall be credited because
advance receipt arises before invoice. Payable Account is also credited at the time of invoice,
if no advance is applied for such invoice or the advance received is less than the invoice
amount.
• For goods that are subject to reverse charge (Purchases from an unregistered vendor), liability
to pay tax arises at the time of receipt of goods or at the time of payment whichever is earlier.
Hence, at the time of receipt of advance, payable account shall be credited because advance
payment arises earlier than receipt of goods. For reverse charge transactions, purchaser has to
issue self-invoice and as invoice can be issued only on receipt of goods in system. Payable
account shall be credited at the time of invoice provided there is no advance payment
application or advance amount applied is less than the invoice value.
• For services that are subject to reverse charge (Import of services and services from an
unregistered vendor), liability to pay tax arises at the time of vendor payment. Hence, payable
account is credited at the time of advance payment. It is also credited at the time of payment
done to vendor post issuance of invoice, if there is no advance payment or if the advance
payment is less than the invoice value. At the time of posting invoice, Payable (Interim) Account
is credited to the extent of payment due to vendor. At the time of payment to vendor, the
same shall be credited to Payable Account.
• For import of services from Associated Enterprises, the treatment would be same as it is in
case of reverse charge for goods.
e. Invoicing under GST:
a. As per Model GST Law read with draft invoice rules, the following documents are to be issued
under GST:
Document Purpose of the document
Tax Invoice A registered taxable person at the time of supplying taxable goods or
services.
Self-Invoice A registered taxable person who is liable to pay tax under reverse charge
for goods or services purchased from a person who is not registered
under GST Law.
Bill of Supply A registered taxable person supplying exempted goods or services.
Credit Note Credit Note is issued by the supplier of goods or services:
➢ If the taxable value or tax amount in a tax invoice is found to
exceed the actual taxable value and tax amount.
➢ Return of goods by the purchaser.
➢ The recipient finds services deficient.
Debit Note The supplier of goods and services issues debit Note.
If the taxable value or tax amount in a tax invoice is less than actual
taxable value or tax amount.

Supplementary
Invoice
The purpose of Debit Note and Supplementary Invoice is the same.
b. All the above documents shall contain details prescribed in Draft Invoice Rules. Further, in case
of exports the invoice shall carry an endorsement SUPPLY MEANT FOR EXPORT ON PAYMENT
OF IGST OR SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST.
c. These documents shall contain a consecutive serial number, unique for a financial year.
Relevance for the product design:
d. In purchase documents, a field Invoice Type has been created with a drop down of Self
Invoice, Debit Note, Supplementary and Non-GST. The user can select the appropriate invoice
at the time of posting. If Invoice Type is blank, system consider it as a tax invoice. Self-invoices
comes with a posted number series which can be defined in Purchase & Payables Setup.
e. In sales documents, a field Invoice Type has been created with a drop down of Taxable Invoice,
Bill of supply, Debit Note, Supplementary Invoice and Non-GST. The user can select the
appropriate invoice at the time of posting. Separate posted number series can be defined for
each of these documents in Locations master.
f. For Service Management module, separate posted invoice number series can be defined in
the Service Setup.
g. The document reports generated for the above invoice types contain the information
prescribed in draft invoice rules.
f. Impact of compliance Returns (GSTRs) on Product Design:
• Compliance Returns have considerable impact on the product design. The requirements as per
the Return and their incorporation in the product design is given in the table below. Please be
noted that apart from those elucidated below there are many other areas, which are impacted
due to compliance returns. They are covered in the appropriate sections of this document.
Feature Requirement Product Design
Non-GST
Supplies
The aggregate of Non-
GST supplies purchased
shall be reported in GSTR-
2
The aggregate of Non-
GST outward supplies
shall be reported in GSTR-
1
An Invoice Type with Non-
GST has been created in both
purchase and sales
documents to capture Non-
GST purchase and sales
separately.
Bill of Entry
Details
For goods imported, Bill
of Entry No., date and
Purchase documents contain
Bill of Entry No. Bill of Entry

Feature Requirement Product Design
value shall be reported in
GSTR-2
date and Bill of Entry Value
fields in Tax Information tab.
These fields are mandatory
where the vendor type is
import and the purchase lines
are of items.
Mandatory
Address for B2C
supplies
The address of the buyer
has to be mandatorily
reflected in every invoice
having a value of Rs.
50000 or more.
Invoices less than Rs.
50000 and not having
address on record shall be
reported as intrastate
sales in GSTR-1
To address this issue, address
and state code fields are
made mandatory in Customer
master.
Bill of Export For goods exported,
shipping bill or bill of
export No. and date are to
be reported in GSTR-1
Sales documents contain Bill
of Export No. & Bill of Export
date fields in Tax Information
tab. These fields mandatory
where the Customer type is
Export and the Sales lines are
of items.

2. GST Setups
a. GST Accounting Period:
• Accounting Periods and sub-periods are created and closed here. Under GST, Fiscal year would
be normally from 1st April to 31st March. However, in the year of initiation, it would be
probably from 1st July 2017 to 31st March 2018. Sub-Accounting Periods are months.
b. GST Group:
• Goods and Services of similar nature are grouped here. Each group is assigned a group code.
• Place of Supply can also be defined for each GST Group. It is critical in determining whether
it is an interstate sale or intrastate sale. Place of Supply can be Bill to Address, Ship to address
or Location address.
• If Place of Supply is not defined in GST Group, then system considers GST Dependency Type
defined in Sales & Receivable Setup as Place of Supply.
c. GST Component:
• GST Components along with formula and jurisdiction type are defined here. As of now, there
are three GST components – IGST, CGST and SGST. IGST is applicable on an interstate Purchase
or Sale whereas CGST & SGST are applicable on an Intrastate Purchase or Sale.
• Jurisdiction type can be intrastate or interstate.
d. GST Posting Setup:
• General Ledger Account for each component is defined state-wise here.
e. GST Setup:
• The percentage and effective date for each GST component is defined state-wise here.
• If GST State Code is blank, then percentage and effective date defined for a GST Component
is applicable for all states where there is no specific entry for such GST Group. For example, if
Advertising Service has a uniform CGST rate in all states except Delhi, then instead of defining
it for each state, it can be defined only once keeping state code as blank. A separate line can
be created for Delhi state with Delhi specific percentage.
f. GST Configuration:
• This setup aids the system in determining the taxable state based upon
➢ Dispatching state code and customer state code for Sales
➢ Receiving state code and vendor state code for Purchases
• Determining the taxable jurisdiction enables the system to pick up the tax percentage
applicable.

• For an export transaction, customer is located outside the country hence customer state code
is blank.
• For an import transaction, vendor state code shall be blank, as vendor is located outside the
country.
g. GST Registration Nos:
• This setup contains the Registration No. of locations situated in different states.
• The first two-digits of a registration number shall contain the state code to which that number
belongs.
h. HSN/SAC:
• HSN/SAC codes for various GST Groups can be defined here.
i. States:
• Each state shall have a two-digit code under GST. Those codes can be defined here.

3. GST Fields in Masters
a. Item Master/Fixed Asset Master:
GST Related
Fields
Purpose
GST Group
Code
GST Group code relevant for the item/Fixed asset shall be selected here.
GST Group codes created in GST Group Setup appears as dropdown here.
GST Credit GST Credit can be Availment or Non-Availment. This field by default
displays Availment. If credit cannot be availed on any item/fixed asset, then
Non-Availment shall be selected manually from the drop down.
HSN/SAC Code All HSN Codes for GST Group code selected above shall be displayed as a
dropdown for this field. User has to select appropriate HSN code.
b. G/L Account Card/Resource/Item Charges
GST Related
Fields
Purpose
GST Group
Code
GST Group code relevant for Service/Resource/Item charge shall be
selected here. GST Group codes created in GST Group Setup appears as a
dropdown here.
GST Credit GST Credit can be Availment or Non-Availment. This field by default
displays Availment. If credit cannot be availed on any service, then Non-
Availment shall be selected manually from the drop down.
HSN/SAC Code All SAC Codes for GST Group code selected above shall be displayed as a
dropdown for this field. User has to select appropriate SAC code.
c. Vendor Master:
GST Related
Fields
Purpose
GST
Registration
No.
Registration No. of vendor shall be entered here. Registration number is
mandatory if GST Vendor Type is Registered. Registration No. shall be of
15-digits.
GST Vendor
Type
GST Vendor type can be Registered, Unregistered, Composite, Import or
Exempted. User has to select the vendor type from the drop down.
Associated
Enterprises
This field is activated only if GST Vendor Type is Import. This is can be used
for an import transaction of services from sister concerns located outside
India.
d. Customer Master:

GST Related
Fields
Purpose
GST Customer
Type
Customer type can be Registered, Unregistered, Export, Deemed Export or
Exempted. User has to select the appropriate Customer type from the
dropdown.
GST
Registration
Type
Registration type can be GSTIN (Goods and Services Tax Payer Identification
Number), UID (Unique Identification Number), and GID (Government
Identification Number). Appropriate type shall be selected from the
dropdown.
GST
Registration
No.
The 15-digit GST Registration Number shall be entered here. Registration
number is mandatory if GST Customer Type is Registered or Deemed
Export.
E-Commerce
Operator
This field is activated, if sales are done through an e-commerce operator.
e. Company Information & Locations Master:
GST Related
Fields
Purpose
GST
Registration
No.
The 15-digit GST Registration Number shall be entered here.
Apart from the above, fields for entering various posted Sales documents numbers has been
provided in the Numbering tab of the Locations master.
f. Service cost
GST Related
Fields
Purpose
GST Group
Code
GST Group code relevant for the service shall be selected here. GST Group
codes created in GST Group Setup appears as dropdown here.
HSN/SAC Code All SAC Codes for GST Group code selected above shall be display as
dropdown for this field. User has to select appropriate SAC code.

4. GST Fields in Purchase, Sales
Documents and General Journals
a. Purchase Header
Field Purpose of the Field
Nature of Supply This field cannot be edited. Nature of Supply can be either
B2B or B2C.
GST Vendor Type This field flows from vendor master and it cannot be edited.
GST Vendor Type can be Registered, Unregistered,
Composite, Import or Exempted.
Invoice Type Invoice Type can be Self-Invoice, Debit Note, Supplementary
or Non-GST. Self-Invoice is applicable only for an
unregistered vendor. The user has to select to the invoice type
at the time of posting invoice
Associated
Enterprises
This field cannot be edited. This flows from the vendor master.
Bill of Entry No. This is a mandatory field when GST Vendor Type is Import
and Type in purchase lines is Item.
Bill of entry Date This is a mandatory field when GST Vendor Type is Import
Bill of entry value This is a mandatory field when GST Vendor Type is Import
b. Purchase Lines
GST Credit This field cannot be edited and it flows from product
masters (Item, G/L card, Fixed Asset, Resource etc.)
GST Group code This is populated based on GST Group code defined in
product masters (Item, Fixed assets, G/L Account etc.). This is
a user editable field.
GST Group Type This field cannot be edited which can be either goods or
services.
HSN/SAC Code This is populated based on the HSN/SAC code defined in
GST Base Amount This field cannot be edited and it displays the Base Amount
on which GST percentage is applied.
Total GST Amount Displays the cumulative GST amount of all components
applicable for the given line.

GST % Cumulative percentage of all components applicable for the
given line as per state and GST Group combination is
displayed here.
c. Sales Header:
GST Bill To State
code
This non-editable field displays the bill to state code.
GST Ship To State
code
This non-editable field displays the ship to state code.
Location State
Code
This non-editable field displays the state code of the
location.
B2B or B2C.
GST Customer
Type
This field flows from customer master and it cannot be edited.
GST Vendor Type can be Registered, Unregistered, Export,
Deemed Export or Exempted.
Invoice Type Invoice Type can be Debit Note, Supplementary or Non-GST.
Self-Invoice is applicable only for an unregistered vendor. The
user has to select to the invoice type at the time of posting
invoice.
GST Without
Payment of Duty
System does not compute GST on an export transaction, if this
field is activated.
Bill of Export No. This is a mandatory field when GST Customer Type is Export
and Type in Sales lines is Item.
Bill of Export Date This is a mandatory field when GST Customer Type is Export
and Type in Sales lines is Item.
E-Commerce
Customer
Select the E-commerce customer. This is available if the e-
commerce field is activated in the customer.
E-Commerce
Merchant ID
The user can select from the drop down of E-commerce
merchant ID table when the sales transaction is through an e-
commerce operator.
d. Service Header:
B2B or B2C.
GST Customer
Type
This field flows from customer master and is an un-editable
field. GST Vendor Type can be Registered, Unregistered,
Export, Deemed Export or Exempted.

Invoice Type Invoice Type can be Debit Note, Supplementary or Non-GST.
Self-Invoice is applicable only for an unregistered vendor. The
user has to select to the invoice type at the time of posting
invoice.
e. Sales Lines
GST Place of
Supply
This is a user editable field, which includes Bill to Address,
Ship to Address and Location Address.
GST Group code This is populated based on the GST Group code defined in
the product masters (Item, Fixed assets, G/L Account etc.).
This is a user editable field.
GST Group Type This field cannot be edited which can be goods or services.
HSN/SAC Code This is populated based on the HSN/SAC code defined in the
GST Base Amount This non-editable field displays the Base Amount on which
GST percentage is applied.
displayed here.
Note: Service lines also contain all the above fields except GST Place of Supply
f. Transfer Lines:
Total GST Amount Shows the cumulative GST amount of all components
GST Jurisdiction This can be either interstate or intrastate.
Note: Service lines also contain all the above fields except GST Place of Supply. Multiple sales
lines may have different place of supply so long as all line result in uniform jurisdiction i.e.
either interstate or intrastate but not both.

For example, if place of supply for one sales line is bill to address which is Tamilnadu and for
another line it is location address is Karnataka. Here the first line results in an interstate
transaction being location address and place of supply are in different states. The second line
results in an intrastate transaction as place of supply and location address being in same state
i.e. Karnataka. System does not allow you to post these types of combinations.
Assuming in the above example, place of supply for the first line is Karnataka; system allows you to
post the transaction, as both lines are intrastate transactions despite place of supply being different.
g. General Journal Lines:
GST on Advance
Payment
This Boolean is to be checked for an Advance payment
GST Credit This non-editable field displays and the credit flows from the
product masters (Item, G/L card, Fixed Asset, Resource etc.)
GST Place of
Supply
This is a user editable field, which includes Bill to Address,
Ship to Address and Location Address.
GST Group Type This field cannot be which can be either goods or services.
displayed here.
Location
Registration No.
This field value is generated based upon the selection of
Location code.
Adv. Pmt.
Adjustment
This field is activated, when a posted advance payment is to
be adjusted.
GST Component This is a transitioning field. The user has to select the GST
component for which the balance of old tax is required to be
transferred. For example, user can select GST component as
CGST, if he wishes to carryforward Service Tax balance as
CGST balance under GST.

Excise Type This is a transitioning field. If the Tax Type selected is Excise,
then the user has to select whether he wishes to transfer it
to RG23A balance or RG23C balance.
h. Vendor Ledger Entry:
i. Customer Ledger Entry:
Field Description
GST on Advance
Payment
Activate this field, if you want to make an advance
payment for this transaction.
HSN/SAC code HSN/SAC code flows from the transaction.
GST Reverse Charge This field is activated if the posted transaction
pertains to reverse charge.
Adv. Pmt. Adjustment This field is activated when a posted advance payment
is adjusted.
Field Description
GST on Advance
Payment
Activate this field, if you want to make an advance
payment for this transaction.
HSN/SAC code HSN/SAC code flows from the transaction.
Adv. Pmt. Adjustment This field is activated when a posted advance payment
is adjusted.

5. GST Ledger Entry and GST Detailed
Ledger Entry
a. Introduction:
• System shall create below GST entries after posting Advance Payment, Invoice, Credit memo,
Transfer Orders involving GST calculations from documents and journals:
➢ GST Ledger Entry
➢ Detailed GST Ledger Entry
• System shall create GST entries per line in documents and journals. The GST Ledger Entry shall
be merge/club the GST Component or Gen. Prod. Posting Group if the same group code is
used multiple times in a single transaction.
• In Detailed GST Ledger Entry, system shall create GST Components wise details for
sales/purchase lines and journal lines.
• System updates these entries in GST Ledger Entry table and GST Detailed Ledger Entry Table.
b. General Ledger Entry:
Field Description
Entry No. Displays the entry number.
Gen. Bus. Posting
Group
Displays the general business-posting group to which
the transaction pertains.
Gen. Prod. Posting
Group
Displays general product posting group to which the
transaction pertains.
Posting Date Displays the date on which the transaction is posted.
Document No. Displays the document number.
Document Type Displays whether the document type is Payment,
Invoice, Credit Memo, Transfer or Refund.
Transaction Type Displays whether the transaction is a sale or purchase.
GST Base Amount Displays the base amount on which GST percentage is
applied.
Source Type For sales transaction, Source Type is customer. For
purchase transaction, Source Type is vendor.
Source No. Displays the vendor number, if Source Type is
vendor. If Source Type is customer, the Customer
No. is displayed.
User ID Displays the user ID of the user who posted the
transaction.
Source Code Displays the source code. Source code can be
PURCHASES, SALES, GENJNL, BANKPYMT etc.

Field Description
Reason Code Displays the reason code defined in Reason Code
table.
Transaction No. Displays the number of the transaction.
External Document
No.
Displays the External Document No. entered in
purchase document.
GST Component Code Displays the GST component code. For an intrastate
transaction, it can be either CGST or SGST. For an
interstate transaction, it is IGST.
GST Amount Displays the tax amount computed by applying GST
percentage on GST base.
GST on Advance
Payment
This field is activated for an advance payment or
receipt.
Reverse Charge This field is activated, if the transaction is reverse
charge. Reverse charge is applicable for import of
goods and purchases from an unregistered vendor.
This field is blank for sales transactions.
Currency Code Displays the currency code if the transaction is posted
in foreign currency.
c. Detailed GST Entry:
Field Description
Entry No. Displays the entry number.
Entry Type Displays whether the entry is an initial entry or an
application.
Transaction Type Displays whether the transaction is a sale or purchase.
Document Type Displays whether the document type is Payment,
Invoice, Credit Memo, Transfer or Refund.
Document No. Displays the document number.
Posting Date Displays the date on which the transaction is posted.
Type Displays whether the type is G/L Account, Item,
Resource, Fixed Asset or Charge (Item).
No. Displays the Item No. , G/L Account No. etc.
Product Type The product type is displayed only when Type is Items.
It displays whether the Item is a normal item or Capital
good.
Source Type For sales transaction, Source Type is customer. For
purchase transaction, Source Type is vendor.
Source No. Displays the vendor number, if Source Type is vendor.
If Source Type is customer, then the customer number
is displayed.

Field Description
HSN/SAC Code Displays the HSN for Items & Fixed Assets. SAC for
Services & Resources. For charges, it can be either SAC
or HSN.
GST Component Code Displays the GST component code. For an intrastate
transaction, it can be either CGST or SGST. For an
interstate transaction, it is IGST.
GST Group Code Displays the GST Group code of the transaction.
GST Jurisdiction Type Displays whether the transaction is an interstate or
intrastate transaction.
GST Base Amount Displays the base amount on which GST percentage is
applied.
GST % Displays the GST % applied on base.
GST Amount Displays the tax amount computed by applying GST
percentage on GST base.
GST Credit This field is blank for a sales transaction. For a
purchase transaction, it can be Availment or Non-
Availment.
GST Group Type GST Group Type can be either goods or service.
External Document
No.
Displays the external document number entered in
the purchase document.
Amount Loaded on
Item
This field displays the amount if GST Credit is Non-
Availment.
Quantity Displays the quantity.
Paid This field is activated, if GST is paid to the government
through GST Settlement.
GST Without Payment
of Duty
This field is activated, for an export sales made
without payment of duty. For purchase transaction,
this field would be blank.
G/L Account No. This displays the G/L Account of tax component.
Reversed by Entry No. Reversal entry number is displayed here. For
transactions posted through payment journals, it can
be reversed in this field.
Reversed This field is activated for transactions posted through
payment journals when the posted entry is reversed.
User ID Displays the user ID of the user who posted the
transaction.
Item Ledger Entry No. Displays the item ledger entry number.
Positive This field is activated if the amounts are positive.
Document Line No. Displays the document line number.
Item Charge Entry This field is activated if the entry is an Item charge
Reverse Charge This field is activated if the transaction is reverse
charge. Reverse charge is applicable for import of

Field Description
goods and purchases from an unregistered vendor.
This field is blank for sales transactions.
GST on Advance
Payment
This field is activated for an advance payment or
receipt.
Nature of Supply Displays whether the transaction is B2B supply or B2C
supply.
Payment Document
No.
For the time being, this field would be blank.
GST Exempted Goods This field is activated if the goods/services are
exempted from GST.
Location State Code Displays the state code of location.
Buyer/ Seller State
Code
Displays the state code of the customer for a sales
transaction. For a purchase transaction, the vendor
state code is displayed.
Shipping Address
State code
Displays the shipping address state code. This state
code flows to GSTR-1 & GSTR-2, if this state code is
not same as Buyer/Seller State code.
Location Reg. No. Displays the GSTIN of location.
Buyer/ Seller Reg. No. Displays the GSTIN of a customer for a sales
transaction. For a purchase transaction, GSTIN of
vendor is displayed.
GST Vendor Type Vendor Type can be Registered, Composition,
Unregistered, Import or Exempted. This field is blank
for Sales.
GST Customer Type Customer Type can be Registered, Unregistered,
Exports, Deemed Exports or Exempted. This field is
blank for Purchases.
Reversal Entry This field is activated if the entry is a reversal entry.
Bill Of Export No. This field displays the Bill of Export No. for and is
applicable for export of goods. This field is for
reporting in GSTR-1. For a purchase transaction, this
field is blank.
Bill Of Export Date This field displays the Bill of Export Date and is
applicable for export of goods. This field is for
reporting in GSTR-1. For a purchase transaction, this
field is blank.
e-Comm. Merchant ID Displays the merchant ID given by the e-commerce
operator, if the sales is through an e-commerce
operator. This field is for reporting in GSTR-1. For a
purchase transaction, this field is blank.
e-Comm. Operator
GST Reg. No.
Shows the registration number of an e-commerce
operator, if the sales are made through an e-
commerce operator. This field is for reporting in

Field Description
GSTR-1. For a purchase transaction, this field would
be blank.
Original Invoice No. Displays the original invoice number.
Original Invoice Date Displays the original invoice date.
Reconciliation Month Displays the year in which the transaction is
reconciled through GST Reconciliation feature. This
field is t blank for a sales transaction.
Reconciliation Year Displays the year in which the transaction is
reconciled through GST Reconciliation feature. This
field is blank for a sales transaction.
Reconciled This field is activated, if a transaction is reconciled
through GST Reconciliation feature. This field is blank
for a sales transaction.
Credit Availed This field is activated, if credit is availed through GST
Reconciliation feature or GST Credit Adjustment
Journal. This field is blank for a sales transaction.
Credit Adjustment
Type
This field is blank for sales transactions. This field is
meant to display Credit Adjustment type, if any made
through Credit Adjustment Journal. The adjustments
can be Blank, Reconciled-Reversal, Reconciled-Reavail,
Unreconciled-Avail, Unreconciled-Reversal or
Unreconciled-Permanent Reversal.
Adv. Pmt. Adjustment This field is activated, when an adjustment is made to
a posted advance payment.
Original Adv. Pmt.
Doc. No.
Displays the original advance payment document
number if the same is adjusted.
Original Adv. Pmt.
Doc. Date
Displays the original advance payment document date,
if the advance payment is adjusted. When an advance
payment is revised, then GSTR-1 & GSTR-2 requires
original advance payment document number and date
to be reported.
Payment Document
Date
For the time being, this field would be blank.

6. Purchases
A. Purchase Scenarios
a. Purchases from a Registered Vendor:
• A Registered Vendor is a person registered with GST authorities. For a Registered Vendor,
on the Vendor Card, select the following:
➢ GST Vendor Type as Registered.
➢ GST Registration No.
➢ State Code
• The first two digits of the registration number is validated against the State code defined in
States Set-up against the Vendor state.
• If the Location state code and Vendor’s state code are different, then the purchase becomes
an interstate purchase and it attracts IGST.
• A purchase becomes an intrastate purchase, if the location and vendor state codes are the
same. CGST & SGST are attracted in this case.
b. Composite Vendor:
Purchases from
Registered
Vendor
Composite
Vendor
Unregistered
Vendor
Exempted
Vendor
Foreign
Vendor
General
Imports
Imports from
Associated
Enterprises

• A Composite Vendor is a vendor whose aggregate turnover in a financial year does not
exceed fifty lakh rupees and has opted for Composition scheme. A composite vendor neither
collects tax from the recipient of supplies nor passes on any credit of Input Tax. Hence, no
GST is computed if the purchases are made from a composite vendor.
• A composite vendor has to register himself with the GST authorities and hence Registration
No. is mandatory in Vendor Card, if the Vendor Type is selected as Composite. State Code
is also mandatory.
• A composite vendor cannot be engaged in supply of services and cannot make inter-state
supplies of goods. However, system allows interstate purchases from a composite vendor and
service purchases.
c. Unregistered Vendor:
• Persons whose aggregate turnover in a financial year does not exceed twenty lakh rupees are
not required to be registered with the GST authorities. Such persons are called Unregistered
Vendors. Any purchases from unregistered vendors attract Reverse Charge i.e. the purchasers
themselves has to pay tax to the government.
• Interstate purchases from an unregistered vendor shall not arise, as any person irrespective of
his turnover has to register with the authorities, if he is making an interstate sale.
• GST Vendor Type shall be unregistered in Vendor Card to handle this scenario. State code
and GST Registration numbers are not mandatory fields for an unregistered Vendor.
• The purchasing user has to issue self-invoices under GST, if the purchases are made from an
unregistered vendor. The user can issue a self-invoice in the system by selecting self-invoice
from the dropdown of Invoice type in Tax Information tab of purchase documents.
d. Exempted Vendor:
• A vendor who is exempted from payment of GST either by Central or State GST authorities is
known as Exempted Vendor. An exempted vendor neither collects tax from customers nor
pays any tax to the government. No GST Entries are generated in the system, if GST Vendor
Type is exempted.
• This vendor type can also be used to handle a scenario where purchase of only certain goods
and services from an Unregistered Vendor is subject to reverse charge and the remaining are
exempted. (Law is not clear as of now). State Code and Registration No. are not mandatory
for the exempted vendor in Vendor Card.

Imports:
• Bringing goods to India from a place outside India is import of goods. For Services, if the
supplier is located outside India, the recipient is located in India and the place of supply is in
India, then it is called Import of services.
• Purchase of goods and/or services from a foreign vendor is subject to Reverse Charge i.e. the
person importing goods or services has to remit tax to the government. Import of goods are
subject to both customs duty and IGST whereas import of services are subject to IGST. There
is another scenario of importing services from associated enterprises. Accounting Entries differ
in each scenario.
• GST Vendor Type shall be Import in Vendor Card for a foreign vendor. Registration Number
and State Code are not mandatory fields in Vendor Card.
B. Input Tax Credit Flow in Purchases:
• Tax paid on purchase of goods and services is called ‘Input Tax’. Such input tax can be CGST
& SGST (Intrastate transactions) or IGST (Interstate transactions).
• Under GST, any registered taxpayer is eligible to take credit of input tax paid on inputs and
inputs purchased by him, if they are used in the course or furtherance of business.
• This input credit availed by the tax payer can be utilized for adjustment of GST payable on
Outward Supplies made by him, subject to certain conditions.
a. GST Credit in NAV:
• Credit Availment is always conditional under GST. For example, GST paid on purchase of motor
vehicles cannot be availed as credit unless they are used for transportation of passengers,
goods or imparting driving training. Similarly, GST paid on rent-a-cab, health insurance and
life insurance cannot be availed as credit.
• Keeping in view of the above, the user has been given flexibility to opt for credit availment or
non-availment by creating GST Credit field in Invoicing tab of Item Master. A similar field is
created in the Posting tab of the G/L Account Card.
• The option selected- Availment or Non-Availment in GST Credit Field either in Item master
or G/L Account Card shall flow to purchase documents. The user can change the option in
purchase lines, if he desires.

• If GST Credit is selected as Availment, then the credit amount is posted to Receivable
(Interim) Account of the relevant GST component(s). If GST Credit is selected as Non-
Availment, then the GST Amount is loaded on purchases Account or Services General
Ledger Account.
b. Credit Flow for Purchases from a Registered Vendor:
• Four conditions have been stipulated in model GST law for availment of credit. They are:
➢ Receipt of goods
➢ Receipt of invoice, debit note, supplementary invoice or any other tax-paying
document.
➢ Payment of tax to the government by supplier
➢ Furnishing GST Return (GSTR-3)
At the time of posting invoice in the system, only two conditions would be satisfied – receipt
of goods and receipt of vendor invoice. Hence, credit is posted to the Receivable Interim
Account at the time of posting purchase documents.
• The third condition specified above, i.e. payment of tax by the supplier can be ignored as it is
difficult to obtain the date of payment from different suppliers on a periodic basis.
• GSTR-1 (Outward Supplies made by the taxpayer) & GSTR-2 (Inward Supplies made by the
taxpayer) are the pre-requisites for filing GSTR-3 (GST Return). In other words, GSTR-3 (GST
Return) contains auto-populated information from GSTR-1(Outward Supplies made by the
taxpayer), GSTR-2 (Inward Supplies made by the taxpayer), GSTR-6 (Return for Input Service
Distributor) and GSTR-7 (TDS Return).
• Based on the invoice level information uploaded by counter party suppliers, GSTR-2A (Inward
Supplies made by the taxpayer) of the purchasing user will be auto populated. The user has to
reconcile GSTR-2A with posted purchase lines in the system. This can be done by using GST
Reconciliation feature.
• To the extent of purchase transactions reconciled, GST credit is posted from Receivable
(Interim) Account to Receivable Account. The credit amount to that extent is also updated in
GST amount of GST Reconciliation table.
• Credit can also be availed on unreconciled transactions on a provisional basis by using Credit
Adjustment Journal. Then also, Credit amount to that extent is updated in GST amount of
GST Reconciliation table.

• GST Amount in Posted Reconciliation table shall flow as Credit Availed in Settlement screen,
which can be adjusted against Output Payment liability.
c. Credit flow for Unregistered Purchases & Import of Services:
• Three conditions are to be complied with in order to avail credit under reverse charge. They
are receipt of goods, receipt of invoice, and payment of tax to government.
• As services are intangible, there can only be receipt of invoice and payment of tax to the
government. As unregistered purchases and import of services are subject to reverse charge,
tax payment to the government is to be done by the purchaser himself. This is done through
GST Settlement screen by selecting Nature of Liability as Reverse Charge – Invoice.
• Credit can be availed on purchase transactions subject to reverse charge in the month in which
the tax is paid to the government. Tax is paid to the government by 20th
of the succeeding
month. For example, if a reverse charge purchase transaction is posted in the month of July,
the tax liability is discharged to government by the 20th
of succeeding month, which is 20th
August. Hence, credit of such tax paid can be availed in the month of August.
Credit Availed in GST Settlement can be used against Output Tax liability
Credit Amount flows from Posted Reconciliation table to Credit Availed field of
GST Settlement
Reconciled Credit from GST Reconciliation and Unreconciled but availed credit
through Credit Adjustment Journal will be updated in Posted Reconciliation Table
Credit on Unreconciled entries availed through Credit Adjustment Journal
(Optional)
Credit of Reconciled Entries transferred from Receivable (Interim) to Receivable
Account in GST Reconciliation
Purchase Lines Reconciled with GSTR-2A downloaded from GSTN Portal using
GST Reconciliation Feature
Credit posted to Receivable (Interim) Account in Purchase Documents

• Hence, at the time of posting the Purchase Invoice for an Unregistered Vendor or Import
of Services, the application posts credit to Input Tax Credit Receivable Interim Account.
Once payment is made to the government through GST Settlement screen, the application
posts credit to Input Tax Credit Account and updates the GST amount of Posted
Reconciliation table in the month of tax remittance to government.
• The credit amount from posted reconciliation table flows to GST Settlement and is available
for set-off against Output Tax liability payable on sales.
d. Credit flow for Import of Goods:
• When goods are imported, the purchaser is liable to pay both Customs duty and IGST to the
Customs authorities. The goods are cleared to Domestic Tariff Area (DTA), only after the taxes
are paid to Customs. Hence, at the time of GRN and thereafter posting Purchase Invoice, the
taxes would have been already paid. Hence, Credit is posted to Receivable Account directly
in case of import of goods.
Credit Availed in GST Settlement can be used against Output Tax liability of Sales
GST Settlement
Credit gets updated in Posted Reconciliation Table in the month of tax payment
to government
Tax liability discharged to government through GST Settlement Screen
Credit posted to Receivable (Interim) Account in Purchase Documents

C. Accounting Entries for Purchase Transactions:
a. Entries for Purchases from a Registered Vendor:
Calculation:
Description Calculation
Base Amount 10000
CGST 1000 (10000*10%)
SGST 1000 (10000*10%)
IGST 2000 (10000*20%)
Entry for an Intrastate Purchase of goods with Credit - Availment
G/L Account Name Debit Amount
(Rs.)
Credit Amount
(Rs.)
Purchases Account……………………………Dr. 10000
SGST Receivable Account (Interim)……….Dr. 1000
CGST Receivable Account (Interim)………Dr. 1000
To Vendor Account 12000
Entry for an Intrastate Purchase Credit Memo for goods with Credit - Availment
(Rs.)
Credit Amount
(Rs.)
Vendor Account………………………………Dr. 12000
To SGST Receivable Account (Interim) 1000
To CGST Receivable Account (Interim) 1000
Credit Availed in GST Settlement can be used against Output Tax liability
GST Settlement
Credit updated in GST Amount of Posted Reconciliation Table
Credit posted to Receivable Account in Purchase Documents

To Purchases Account 10000
Entry for Intrastate purchase of goods with Credit – Non -Availment
(Rs.)
Credit Amount
(Rs.)
Entry for Intrastate purchase Credit Memo for goods with Credit – Non Availment
(Rs.)
Credit Amount
(Rs.)
Vendor Account…………………..……………Dr. 12000
Note:
1. Entries for purchases would be similar except that Service General Ledger Account replaces
Purchases Account in the above entries. Similarly, for fixed assets, Fixed Assets Account
replaces Purchases Account.
2. Entries for interstate transactions would be similar to the above entries except that CGST &
SGST Receivable (Interim) Account is replaced by IGST Receivable (Interim) Account
wherever applicable.
b. Entry for purchases from a Composite Vendor & Exempted Vendor
(Rs.)
Credit Amount
(Rs.)
Entry for purchase Credit Memo for a Composite Vendor and Exempted Vendor
(Rs.)
Credit Amount
(Rs.)
Vendor Account…………………..……………Dr. 10000
Note:
1. No GST entries are generated for a composite vendor, as a composite vendor is not entitled
to collect any tax from the customers.
2. Similarly, no GST entries are generated for exempted vendor, as an exempted vendor is exempt
from payment of GST.

c. Entry for Import of goods with Credit – Availment:
Calculation:
Base Amount inclusive of CIF 10000
Customs Duty (BCD)
(assumed)
1000 (10000*10%)
IGST 2200 (11000*20%)
Entry for Import of Goods with Credit – Availment
(Rs.)
Credit Amount
(Rs.)
IGST Receivable Account……………………Dr. 2200
To Customs House Account 3200
Note:
1. Customs House Account is to be defined in General Ledger Setup as IGST Payable
Account in Import.
2. Customs duty is loaded on purchases and is included in Customs House Account.
Entry for Import of Goods with Credit – Non Availment:
(Rs.)
Credit Amount
(Rs.)
To Customs House Account 3200

d. Entries for purchase of goods from an Unregistered Vendor
Purchases from an Unregistered Vendor attracts reverse charge. i.e. the purchaser himself has to
pay tax to the government on such purchases.
As per the Time of supply provisions in Model GST Law, liability to pay tax arises at the time of
posting invoice, in the system. Hence, GST is posted to Payable Account at the time of posting
purchase documents.
Entry for intrastate purchase of goods with Credit - Availment
(Rs.)
Credit Amount
(Rs.)
Purchases Account………………………….…Dr. 10000
CGST Receivable (Interim) Account……..…Dr. 1000
SGST Receivable (Interim) Account………..Dr. 1000
To CGST Payable Account 1000
To SGST Payable Account 1000
Entry for intrastate Purchase Credit Memo for goods with Credit - Availment
(Rs.)
Credit Amount
(Rs.)
Vendor Account……………………………..…Dr. 10000
CGST Payable Account 1000
SGST Payable Account 1000
To CGST Receivable (Interim) Account 1000
To SGST Receivable (Interim) Account 1000
Entry for intrastate purchase of goods with Credit – Non Availment
(Rs.)
Credit Amount
(Rs.)

Entry for intrastate Purchase Credit Memo for goods with Credit – Non Availment
(Rs.)
Credit Amount
(Rs.)
CGST Payable Account………………………Dr. 1000
SGST Payable Account…………………….….Dr. 1000
Note:
Interstate purchases from an unregistered vendor shall not arise and hence entries are not
provided for the same.
e. Entries for Import of Services and purchase of services from an Unregistered
Vendor:
As per Model GST Law, the time of supply for services that are subject to reverse charge is the
date on which payment to vendor is made. Hence, in the system, GST is credited to Payable
(Interim) Account at the time posting purchase documents. Once the vendor payment is applied
to an invoice, then the same is transferred from Payable (Interim) Account to Payable Account.
Entry for purchase of Services from an Unregistered Vendor Credit - Availment
(Rs.)
Credit Amount
(Rs.)
To CGST Payable (Interim) Account 1000
To SGST Payable (Interim) Account 1000
Entry for purchase credit memo for Services from an Unregistered Vendor Credit -
Availment
(Rs.)
Credit Amount
(Rs.)
Vendor Account………………………..…….…Dr. 10000
CGST Payable (Interim) Account……..…….Dr. 1000
SGST Payable (Interim) Account…….………Dr. 1000

Entry for purchase of services with Credit – Non Availment
(Rs.)
Credit Amount
(Rs.)
Entry for purchase credit memo of services with Credit – Non Availment
(Rs.)
Credit Amount
(Rs.)
Vendor Account……….…………………….…Dr. 10000
CGST Payable (Interim) Account…………...Dr. 1000
SGST Payable (Interim) Account …………...Dr. 1000
Note:
Interstate purchases from an unregistered vendor shall not arise and hence entries are not provided
for the same.
Entry for Import of Services with Credit - Availment
(Rs.)
Credit Amount
(Rs.)
IGST Receivable (Interim) Account……..…Dr. 2000
To IGST Payable (Interim) Account 2000
Entry for Purchase Credit Memo for Import of Services with Credit - Availment
(Rs.)
Credit Amount
(Rs.)
IGST Payable (Interim) Account………....…Dr. 2000
To IGST Receivable (Interim) Account 2000

Entry for Import of Services with Credit – Non Availment
(Rs.)
Credit Amount
(Rs.)
Entry for Purchase Credit Memo for Import of Services with Credit – Non-Availment
(Rs.)
Credit Amount
(Rs.)
IGST Payable (Interim) Account…………….Dr. 2000
D. TDS & GST on Purchase Transactions
• One new field Inc. TDS in GST Base has been added in Structures Details. During GST calculation
through structure in purchase documents, GST value for purchase line is considered in TDS base,
if this Boolean is checked. If it is unchecked, then GST Amount is not considered in computation
of TDS in purchase lines.
a. TDS computation in Purchase Invoice and Accounting Entries:
Particulars Amount (Rs.)
IGST Rate 20%
Base Amount 10000
IGST Amount (10000*20%) 2000
Incl. of GST in TDS Base TRUE
TDS% 10
TDS Amount (12000*10%) 1200
Incl. of GST in TDS Base FALSE
TDS Amount (10000*10%) 1000

Accounting Entry for TDS & GST in Purchase document:
Particulars Debit (Rs.) Credit (Rs.)
Service Account………….................................Dr. 10000
IGST Receivable (Interim) Account……………Dr. 2000
To TDS Payable Account 1200
Note:
In the above entry, if TDS is computed excluding GST, then Vendor Account and TDS Payable
Account becomes Rs. 11000 and Rs. 1000 respectively.
b. TDS Computation in Purchase Invoice (Reverse charge) and Accounting Entries:
Under Reverse charge, GST is payable by the purchaser. Hence the amount that is payable to
vendor does not include TDS. Therefore, whether GST is included in GST or not, TDS
computation remains the same.
IGST Rate 20%
Base Amount 10000
IGST Amount (10000*18%) 2000
Incl. of GST in TDS Base TRUE
TDS% 10
TDS Amount (1000*10%) 1000
Incl. of GST in TDS Base FALSE
TDS Amount (10000*10%) 1000
Accounting Entry for TDS & GST in purchase document (Reverse charge)
Service Account………….................................Dr. 10000
IGST Receivable (Interim) Account…..………Dr. 2000

7. Sales
A. Sales Scenarios
a. Business-to-Business Sales (B2B):
• Sales to a registered customer are known as B2B sales. If the Shipping location’s state code
and place of supply state code are same, then the transaction becomes an intrastate sale and
CGST & SGST are payable. If the shipping location’s state code and place of supply are in
different states, then the transaction become an interstate and IGST is payable.
• For B2B sales, GST Customer Type shall be selected as Registered. Registration No., State
Code and Address are mandatory fields for these transactions.
b. Business to Customer Sales (B2C):
• Sales to unregistered customer are known as B2C sales. There is no difference is computation
of tax for a B2B and B2C sales. However, they are required to be reported in separate tables in
GSTR-1.
• For B2C sales, GST Customer Type shall be selected as Unregistered. State Code and Address
are mandatory fields for these transactions.
c. Exports Sales:
• Export of goods is defined as taking goods out of India to a place outside India. Export of
Services means the supply of services where the supplier of service is located in India, recipient
of service is located outside India and the place of supply is outside India.
• Exports can be without Payment of duty or with payment of duty.
Sales
B2B Sales B2C Sales Exports Sales
Deemed
Exports
Exempt Sales
E-commerce
Sales

• Exports without payment of duty: Exports are normally Zero rated transactions and hence
no duty is paid on them. Certain procedures need to be complied with, for removing goods
without payment of duty, which includes submission of a bond. GST paid on Inputs and Input
services can be claimed as refund, if such inputs and input services are meant for exports.
• Exports with payment of duty: However, if any exporter has accumulated Input credits and
wishes to utilize them then he can opt for payment of duty. The duty paid can be claimed as
refund later. IGST is payable on such transactions.
Export transactions in NAV:
• GST customer Type shall be selected as Exports for Export transactions. State code in
Customer master shall be blank for exports. In GST configuration setup, dispatching state
code is the location state code and Customer state code is blank. System calculates IGST on
such transactions.
• If Export is without payment of duty, then GST without payment of duty Boolean is to be
checked.
• If GST Customer Type is Export and Type in Sales lines is Item, then Bill of Export date and
Bill of Export No. fields have to be mandatorily filled in Sales header.
d. Deemed Exports:
• Deemed Exports refer to those transactions in which the goods supplied do not leave India
and payment for such supplies is received either in Indian Rupees or in convertible foreign
exchange.
• Supply of goods and /or services to an SEZ developer or SEZ or EOU falls under this
category.
• GST customer Type shall be selected as Deemed Exports in Customer master. System
calculates IGST on such transactions.
e. Exempt Sales:
• Sales made to an exempted customer are known as Exempt sales. GST Customer Type shall
be selected as Exempted. No GST is computed on such transactions
f. Sales through an e-commerce operator:
• Sales through an e-commerce operator is similar to normal sales transactions. However, they
are required to be reported separately in GSTR-1 along with GSTIN of E-commerce operator
and merchant Id assigned by E-commerce operator to the company.
• For this purpose, a check mark by name E-commerce operator is created in Customer master.
E-commerce operator is created as customer and this Boolean is to be checked at the time of
such creation.

• An E-commerce merchant Id table has also been created where the user can define the
merchant Id and the applicable GSTIN of the location. (Customer master – Navigate)
• Two fields are added on sales header E-commerce Operator field for selecting e-commerce
operator relevant for the transaction and E-commerce Merchant Id field for selecting
merchant Id assigned by the E-Commerce operator to the company. All customers checked
with E-commerce operator in customer master come as a drop down for E-commerce
operator field. E-commerce Merchant Id table is linked to E-commerce merchant Id field
so that the user can select the appropriate Id.
• These two fields’ flows from sales document flows to Detailed GST Ledger while posting the
transaction from which they are reported in GSTR-1
g. Price Inclusive Tax:
• This is more of a product feature than a tax scenario. This is a scenario where the system
reverse calculates tax from the price of the product. This is useful especially in retail industry
prices of the product includes tax
• Price Inclusive of Tax field on Item master shall be true and PIT structure shall be selected
for calculating PIT in sales transactions.
A. Accounting Entries:
Calculation:
Base Amount 10000
CGST 1000 (10000*10%)
SGST 1000 (10000*10%)
IGST 2000000*20%)
a. Normal Sales Entries:
Entry for Intrastate Sale to a Registered Customer
(Rs.)
Credit Amount
(Rs.)
Customer Account……………………………Dr. 12000
To Sales Account 10000

Entry for Intrastate Sales Credit Memo to a Registered Customer:
(Rs.)
Credit Amount
(Rs.)
Sales Account…………………………………..Dr. 10000
SGST Payable Account………………………...Dr. 1000
CGST Payable Account………………………..Dr. 1000
To Customer Account 12000
Note:
1. For an Interstate transaction, CGST & SGST Payable Accounts are to be replaced by IGST
Payable Account.
2. Entries for Registered Customer and Unregistered Customer are one and the same
3. For Services, Sales Account is replaced by Services General Ledger Account. Fixed Assets
Account replaces Sales Account for Fixed Assets.
b. Export Entries:
Entry for Export of goods with Payment of Duty
(Rs.)
Credit Amount
(Rs.)
IGST Refund Account………………………..Dr. 2000
To IGST Payable Account 2000
Entry for Export of goods without Payment of Duty
(Rs.)
Credit Amount
(Rs.)
Note:
1. Entries for Exports and Deemed Exports Customer are one and the same
2. For Services, Sales Account is replaced by Services General Ledger Account. Fixed Assets
Account replaces Sales Account for Fixed Assets

c. Exempted Sales:
Entry for Exempted Sales
(Rs.)
Credit Amount
(Rs.)
Entry for Sales Credit Memo for Exempted Sales
(Rs.)
Credit Amount
(Rs.)
Sales Account………………………………….Dr. 10000
B. GST & TCS in Sales:
• TCS shall be computed inclusive of GST. In other words, it shall be computed on GST Base
and GST amount together.
IGST Rate 20%
Base Amount 10000
IGST Amount (10000*20%) 2000
TCS% 1%
TDS Amount (12000*1%) 120
Entry including both GST & TCS
(Rs.)
Credit
Amount (Rs.)

8. Advance Payment and its Application
to Invoice
A. Advance Payment – Purchases
• GST on Advance Payment field needs to be activated in General Journal Line for computation
of GST on Advance Payment. In addition, GST Group code, GST Place of Supply and HSN/SAC
Codes are to be entered for computation of GST.
• GST on Advance Payment is calculated in the following scenarios:
➢ Import of Services
➢ Purchase of goods and services from an unregistered person
• GST on Advance Payment is not calculated in the following scenarios. In other words, system shall
not allow you to check GST on Advance Payment in the following scenarios:
➢ Normal purchases
➢ Import of goods
For the above scenarios, no GST liability is created at the time of advance payment and hence no
GST related accounting entries are generated.
• In case of scenarios that are subject to reverse charge, the purchaser himself has to pay tax to the
government. As per Time of Supply provisions of Model GST law, liability to pay tax arises at the
time of advance payment for reverse charge scenarios. Hence, the system computes tax for import
of services and purchase of goods and services from an unregistered person.
• The provisions of Customs Act govern import of goods and as there is no provision for payment
of tax on advances under Customs Act, no liability is created at the time of advance payment for
import of goods.
• The liability is created for import of services and purchases from an unregistered person by
crediting GST to Payable Account.
• There is no Credit Availment or Non-Availment option for advance payment. Hence Receivable
(Interim) is by default debited in all cases.
• An advance payment entry can be reversed before the tax is paid to government. If the tax liability
is discharged to the government through GST Settlement screen, then paid field in Detailed
Ledger Entry is activated. Then the advance payment cannot be reversed.

• Calculation of GST on Advance Payment:
SGST Rate 10%
CGST Rate 10%
Advance Payment 10000
CGST Amount (10000*10%) 1000
SGST Amount (10000*10%) 1000
Advance Payment made to vendor does not include tax payment, as the purchaser is liable to pay
tax under reverse charge. Hence, tax is applied straight away on base.
• Entry for Advance Payment when GST on Advance Payment is checked:
(Rs.)
Credit Amount
(Rs.)
To Bank Account 10000
Reversal Entry for Advance Payment when GST on Advance Payment is checked:
(Rs.)
Credit Amount
(Rs.)
Bank Account………………………………..…Dr. 10000
CGST Payable Account……………………..…Dr. 1000
SGST Payable Account………………………..Dr. 1000
B. Advance Payment Application to Purchase Invoice
• An advance payment made to vendor for a transaction that is subject to reverse charge is to be
reported in GSTR-2 along with the HSN/SAC Code, as the tax rate is dependent on the HSN/SAC
code. For every advance payment reported in GSTR-2, the GSTN portal generates a transaction ID
once the payment is made to the government.
• When the advance payment is applied in the same month to an invoice, then the liability for
payment arises for both advance payment and invoice in the same month and such applications
need not be disclosed in GSTR-2.

• However, if advance payment is paid in a month and is applied to invoice in the subsequent
month, then this application is to be reported in GSTR-2 referring the transaction ID generated at
the time of discharging tax liability on advance payment to the government.
• This transaction ID helps in mapping the advance payment application with the invoice. GSTN
portal is expected to have inbuilt mechanism where it validates the HSN/SAC code entered at the
time of advance payment with HSN/SAC code specified in invoice based upon this transaction ID.
• Hence, the advance payment application in the system is developed in such a way that the system
validates the HSN/SAC code of both invoice and advance payment, and allows applying them only
if they are same.
• HSN/SAC is required to be mandatorily entered at the time of posting an advance payment. This
HSN/SAC is displayed in the Vendor Ledger Entries page.
• If an invoice is having a single line or multiple lines with same HSN/SAC code, then system
validates at the time of application whether the HSN/SAC code in advance payment matches with
that of HSN/SAC entered in purchase lines. System does not allow you to apply if HSN/SAC in
both documents are not the same.
• If an invoice is having multiple lines with multiple HSN/SAC codes, then any of such HSN/SAC
codes shall match with HSN/SAC code in Advance Payment. The advance amount is applied to the
purchase line amount having same HSN/SAC code. This can be explained with the following
example:
Advance Payment:
Entry Type HSN
Code
GST
Component
GST
Group
code
GST
Base
Amount
GST% GST
Amount
Initial Entry SAC01 CGST 0989 10000 10.00 1000
Initial Entry SAC01 SGST 0989 10000 10.00 1000
Application of Advance Payment with Invoice:
Entry Type HSN
Code
GST
Component
GST
Group
code
GST
Base
Amount
GST% GST
Amount
Application SAC01 CGST 0989 -5000 10.00 -500
Application SAC01 SGST 0989 -5000 10.00 -500

Vendor Ledger Entries:
Document
Type
Original
Amount
Amount Remaining
amount
HSN/SAC
Code
GST on
Advance
Payment
Payment 10000 10000 5000 SAC01 Yes
Invoice -15000 -15000 -10000 - -
• Credit on tax payable at the time of advance payment can be availed when:
➢ The tax liability is discharged to the government
➢ The advance payment is applied to the invoice
• When an advance payment is applied to an invoice before payment is made to the government,
and then out of the two conditions, only one condition is satisfied. Hence, credit will still be in
Receivable (Interim) Account. It goes to Receivable Account only when it is discharged to the
government through GST Settlement Screen.
• When an advance payment is applied to an invoice after payment is made to the government, and
then the two conditions stipulated above are satisfied. Hence, the credit to the extent of advance
amount applied to invoice goes to Receivable Account from Receivable (Interim) Account.
• Calculation Example for Accounting Entries:
SGST Rate 10%
CGST Rate 10%
CGST Amount (10000*10%) 1000
SGST Amount (10000*10%) 1000
Invoice Amount 20000
SGST Amount (20000*10%) 2000
CGST Amount (20000*10%) 2000
• Online Application of an Advance Payment to Invoice before tax on advance payment is
paid to the government- Goods with Credit Availment (when Paid Boolean is not checked)
(Rs.)
Credit Amount
(Rs.)
Purchase Account……………………………….…Dr. 20000
CGST Receivable (Interim) Account…………… Dr. 2000
SGST Receivable (Interim) Account……………..Dr. 2000

(Rs.)
Credit Amount
(Rs.)
CGST Payable Account………………………….Dr. 1000
SGST Payable Account………………………….Dr. 1000
Note:
Entries in pink are generated, if advance payment is applied to Invoice offline i.e. through vendor
ledger entries.
For Interstate transactions CGST, SGST shall be replaced by IGST.
• Un-Application of an Advance Payment to Invoice before tax on advance payment is paid
to the government- Goods with Credit Availment (when Paid Boolean is not checked)
G/L Account Name Debit
Amount (Rs.)
Credit
Amount (Rs.)
Note:
Un-application entries are same for both online application and offline application.
For Interstate transactions CGST, SGST shall be replaced by IGST
• Online Application of an Advance Payment to Invoice before/after tax on advance payment
is paid to the government- Goods without Credit Availment (when Paid Boolean is
checked/unchecked)
Amount (Rs.)
Credit
Amount (Rs.)
Purchase Account……………………………….…Dr. 24000
Note:
Entries in pink are created, if advance payment is applied to Invoice offline i.e. through vendor
ledger entries.

• Un-Application of an Advance Payment to Invoice before/after tax on advance payment is
paid to the government- Goods without Credit Availment (when Paid Boolean is
checked/unchecked)
Amount (Rs.)
Credit
Amount (Rs.)
Note:
Online Application of an Advance Payment to Invoice before tax on advance payment is
paid to the government- Services with Credit Availment (when Paid Boolean is not
checked)
(Rs.)
Credit Amount
(Rs.)
Services General Ledger Account…………………Dr. 20000
CGST Payable (Interim) Account…….………….Dr. 1000
SGST Payable (Interim) Account………….…….Dr. 1000
Note:
ledger entries.
• Un-Application of an Advance Payment to Invoice before tax on advance payment is paid
to the government- Services with Credit Availment (when Paid Boolean is not checked)
Amount (Rs.)
Credit
Amount (Rs.)

Note:
• Online Application of an Advance Payment to Invoice before/after tax on advance payment
is paid to the government- Services without Credit Availment (when Paid Boolean is
checked/unchecked)
Amount (Rs.)
Credit
Amount (Rs.)
Services General Ledger Account …………………………Dr. 24000
CGST Payable (Interim) Account………………………….Dr. 1000
SGST Payable (Interim) Account………………………….Dr. 1000
Note:
ledger entries.
• Un-Application of an Advance Payment to Invoice before/after tax on advance
payment is paid to the government- Services without Credit Availment (when Paid
Boolean is checked/unchecked)
Amount (Rs.)
Credit
Amount (Rs.)
Note:
• Online Application of an Advance Payment to Invoice after tax on advance payment is paid
to the government- Goods with Credit Availment (when Paid Boolean is checked)

(Rs.)
Credit Amount
(Rs.)
Purchase Account…………………..…………….…Dr. 20000
CGST Receivable Account……………………….Dr. 1000
SGST Receivable Account………….……………Dr. 1000
CGST Payable Account…………….…………….Dr. 1000
SGST Payable Account…………….…………….Dr. 1000
Note:
Entries in pink are created, if advance payment is applied to an invoice offline i.e. through vendor
ledger entries.
• Un-Application of an Advance Payment to Invoice after tax on advance payment is paid to
the government- Goods with Credit Availment (when Paid Boolean is checked)
Amount (Rs.)
Credit
Amount (Rs.)
To CGST Receivable Account 1000
To SGST Receivable Account 1000
Note:
• Online Application of an Advance Payment to Invoice after tax on advance payment is paid
to the government- Services with Credit Availment (when Paid Boolean is checked)
Amount (Rs.)
Credit
Amount (Rs.)
Services General Ledger Account…………………Dr. 20000

Amount (Rs.)
Credit
Amount (Rs.)
CGST Payable (Interim) Account…….………….Dr. 1000
SGST Payable (Interim) Account………….…….Dr. 1000
CGST Receivable Account……………………… Dr.
SGST Receivable Account………………………..Dr.
Note:
Entries in pink are created, if advance payment is applied to an invoice offline i.e. through vendor
ledger entries.
• Un-Application of an Advance Payment to Invoice after tax on advance payment is paid to
the government- Services with Credit Availment (when Paid Boolean is checked)
Amount (Rs.)
Credit
Amount (Rs.)
Note:
• An advance payment cannot be applied to an invoice if the tax liability is paid to the government
on both documents through GST Settlement screen.
C. Advance Payment, GST & TDS:
Advance Payment is applicable only for purchase scenarios that are subject to reverse charge.
Hence, it shall always exclude GST because Advance Payment under GST does not include GST
Amount.
Advance Received 10000
IGST Rate 20%
Base Amount 10000
IGST Amount (10000*20%) 2000
TDS% 10%
TDS Amount 1000

IGST (20000*20%) 4000
TDS% 10%
TDS Amount 2000
Accounting Entry at the time of Advance Payment:
Vendor Account………………………...............Dr. 10000
Accounting Entry at the time of Invoice (Online Application)
Services General Ledger Account …….................Dr. 20000
IGST Payable Account……………………….......Dr. 2000
D. Advance Receipt – Sales:
• GST on Advance Payment field is activated in General Journal Line for computation of GST on
Advance Receipt. In addition, GST Group code, GST Place of Supply and HSN/SAC Codes are to
be entered for computation of GST.
• GST on Advance Receipt is calculated in the following scenarios:
➢ Registered Sales
➢ Unregistered Sales
• GST on Advance Receipt is not calculated in the following scenarios. In other words, system shall
not allow to check GST on Advance Payment in the following scenarios:
➢ Exports
➢ Deemed Export
➢ Exempted Sales
For the above scenarios, no GST liability is created at the time of advance payment and hence no
GST related accounting entries are generated.

• As per Time of Supply provisions of Model GST law, liability to pay tax arises at the time of
advance receipt and hence the system back calculates tax component in advance payment and
posts the same to the credit of Payable Account and debit of Payable (Interim) Account.
• An advance receipt entry can be reversed before the tax is paid to government. If the tax liability
is discharged to the government through GST Settlement screen, then paid field in Detailed
Ledger Entry is activated. Then the advance receipt cannot be reversed.
• Calculation of GST on Advance Payment:
SGST Rate 9%
CGST Rate 9%
GST Base Amount (10000*100/118) 8475
CGST Amount (8475* 9%) 762
SGST Amount (8475* 9%) 763
• Entry for Advance Receipt when GST on Advance Payment is checked:
(Rs.)
Credit Amount
(Rs.)
Bank Account…………………………………Dr. 10000
CGST Payable (Interim) Account……….…Dr. 762
SGST Payable (Interim) Account…………..Dr. 763
Reversal Entry for Advance Receipt when GST on Advance Payment is checked:
(Rs.)
Credit Amount
(Rs.)
Customer Account…………………………..…Dr. 10000
CGST Payable Account…………………….…Dr. 762
SGST Payable Account………………………..Dr. 763
E. Advance Receipt Application to Sales Invoice
• An advance received from a customer is to be reported in GSTR-1 along with the HSN/SAC code,
as the tax rate is dependent on the HSN/SAC code. For every advance payment reported in GSTR-
1, the GSTN portal generates a transaction ID once payment is made to government.

• When the advance receipt is applied in the same month to an invoice, then the liability for payment
arises for both advance receipt and invoice in the same month and such applications need not be
disclosed in GSTR-1.
• However, if advance receipt is paid in a month and is applied to invoice in the subsequent month,
then this application also needs to be reported in GSTR-1 referring the transaction ID generated
at the time of discharging tax liability on advance receipt to the government.
• This transaction ID helps in mapping the advance receipt application with the invoice. GSTN portal
is expected to have inbuilt mechanism where it validates HSN/SAC code entered at the time of
advance receipt with HSN/SAC code specified in invoice based upon this transaction ID.
• Hence, the advance receipt application in the system is developed in such a way that the system
validates the HSN/SAC code of both invoice, advance receipt, and allows you to apply only if they
are same.
• HSN/SAC is required to be mandatorily entered at the time of posting an advance receipt. This
HSN/SAC code is displayed in the Customer Ledger Entries page.
• If an invoice is having a single line or multiple lines with same HSN/SAC code, then system
validates at the time of the application whether HSN/SAC code in advance receipt matches with
that of HSN/SAC entered in purchase lines. System does not allow applying if HSN/SAC is both
documents are not same.
• If an invoice is having multiple lines with multiple HSN/SAC codes, then any of such HSN/SAC
codes shall match with HSN/SAC code in advance receipt. The advance amount is applied to the
purchase line amount having same HSN/SAC code. This can be explained with the following
example:
Advance Receipt
Entry Type HSN
Code
GST
Component
GST
Group
code
GST Base
Amount
GST% GST
Amount
Advance Receipt Application with Invoice:
Entry Type HSN
Code
GST
Component
GST
Group
code
GST Base
Amount
GST% GST
Amount

Application SAC01 CGST 0989 -5000 9.00 -450
Application SAC01 SGST 0989 -5000 9.00 -450
Customer Ledger Entries:
Document
Type
Original
Amount
Amount Remaining
amount
HSN/SAC
Code
GST on
Advance
Payment
Payment -10000 -10000 -4100 SAC01 Yes
Invoice 17700 17700 -11800 - -
• Calculation Example for Accounting Entries:
SGST Rate 9%
CGST Rate 9%
Advance Receipt 10000
GST Base Amount
(10000*100/118)
8475
CGST Amount (8475* 9%) 762
SGST Amount (8475* 9%) 763
SGST Amount (20000*9%) 1800
CGST Amount (20000*9%) 1800
• Online Application of an Advance Receipt to Invoice
Amount (Rs.)
Credit
Amount (Rs.)
Customer Account…………………………………Dr. 23600
Note: Entries in pink are generated, if advance payment is applied to an invoice offline i.e. through
customer ledger entries.
• Un-Application of an Advance Receipt to Invoice

Amount (Rs.)
Credit
Amount (Rs.)
CGST Payable (Interim) Account…………… Dr. 762
SGST Payable (Interim) Account……………..Dr. 763
Note:
An advance receipt and invoice application cannot be unapplied, if the tax liability on both is
discharged through GST Settlement Screen.
F. Advance Receipt, GST & TCS:
Advance Received 10000
IGST Rate 20%
Base Amount (10000*100/120) 8333
IGST Amount (8333*20%) 1667
TCS% 1%
TCS Amount 100
IGST (20000*20%) 4000
TCS% 1%
TCS Amount (24000*1%) 240
Advance Receipt Entry:
(Rs.)
Credit Amount
(Rs.)
Bank Account…………………………………Dr. 10000
IGST Payable (Interim) Account……….…Dr. 1667
To TCS Payable Account 100

Invoice Online Application Entry:
Amount (Rs.)
Credit
Amount (Rs.)
Customer Account…………………………………Dr. 24140
To TCS Payable Account 140
IGST Payable Account……………………………Dr. 1667
G. Advance Payment/Receipt Adjustment
• The user at the time of Advance Payment/Receipt is required to apply some HSN/SAC code for
the transaction to determine the tax and make payment/receipt to the government. However,
thereafter, it may be necessary for the user to appropriate the advance payment/receipt to an
invoice having different HSN/SAC with same rate or altogether a different rate.
• Once an advance payment/receipt is reported in the return and tax liability is discharged to the
government, then a transaction ID will be generated. In subsequent periods, when any invoice is
applied to such an advance payment, such applications need to be disclosed in the return along
with transaction ID and the tax paid at the time of advance payment. GSTN portal is expected to
validate HSN/SAC Code of invoice with that of advance payment/receipt by means of transaction
ID.
• When an advance payment/receipt is to be applied to an invoice having different HSN/SAC code,
then advance payment/receipt is required to be revised with HSN/SAC code of the invoice and
any difference in tax liability due to change in rate is to be discharged to the government. This
revision also needs to be disclosed in the return subsequent to which the revised advance
payment/receipt can be applied to the Invoice.
• System, when applying an advance payment/receipt to an invoice validates the HSN/SAC code
and allows them to be applied only when the code is identical in both the documents. When user
wants to apply an advance payment/receipt to an invoice having a different HSN/SAC code, the
same can be done by revising the advance payment/receipt through this functionality.
• The advance payment adjustment shall be processed by posting a refund entry and by posting a
new advance payment with refund amount.
• The advance payment adjustment shall be posted manually through Payment Journal and Cash
Receipt Journal.

• User need to create a refund entry and apply with original advance payment entry. In addition, the
user needs to create advance payment entry with same document number along with the refund
entry.
• Adv. Pmt. Adjustment field in General journal Line is to be activated for the purpose of this
adjustment.
• While posting adjustment entry, system posts both entries together. System validates the refund
entry amount with advance payment entry amount and ensures that the amount in both entries
are equal.
• On posting of the adjustment entry, system creates a customer/vendor ledger entry, which
contains an adjustment entry flag.
• System will not allow the user to reverse the adjustment entry.

9. Service Management, Stock Transfers
and Transitional Provisions
A. Service Management:
• There is no change in the functionality of Service Management. Necessary fields are added in
Service Cost, Service Header and Service Lines to enable computation of GST in Service Order
and Service Invoice. Accounting entries are similar to accounting entries generated for sales
transactions.
B. Stock Transfers:
a. Background:
• Stock transfers between locations having different registration numbers are taxable under GST.
If the shipment location and recipient location both are in the same state, then CGST and SGST
are levied. IGST is payable if the shipment and recipient locations are in different states.
Transfers between locations in the same state with same registration numbers are not liable
to be taxed.
• Transfer is an Outward supply for shipment location. Hence GST becomes payable on such
transactions and the same is to be reported in GSTR-1. Once the shipment location uploads
GSTR-1 into GSTN portal, the transfer reflects in GSTR-2A of the recipient location.
b. Stock Transfers functionality in NAV:
• The existing Transfer Orders in NAV can be used to execute stock transfers between locations.
User is required to select GST related Structure in transfer order for calculating GST.
• GST is calculated if GST Registration No. specified in both locations are different. If GST
Registration No. is not mentioned in location master, then GST will not be calculated on such
transfer.
• Transfer involves two events – Shipment from Shipment location and Receipt by Recipient
location.
• At the time of posting a transfer order, user has to select either Shipment or Receipt. On
selecting and posting, the status of the transfer order changes to released. Once the other
option is also selected and posted, the transfer order is deleted from Transfer Order List page.
• If Shipment is selected at the time of posting and if the transfer is interstate, then the following
entry is generated:

Amount
Credit Amount
Unrealized Profit Account ……………………………………Dr. 200
Inventory Adjustment Account ………………………………Dr. 1000
To Inventory Account 1000
Note:
If the transfer is intrastate, then in the above entry, IGST is replaced by CGST and SGST.
• The above Payable Amount shall be reflected in GST Settlement when the nature of liability
is selected as Sales.
• If Receipt is selected at the time of posting and if the transfer is interstate, then the following
entry is generated:
G/L Account Name Debit Amount Credit Amount
IGST Receivable (Interim) Account ….………………Dr. 200
To Unrealized Profit Account 200
Inventory Account ……………………………………Dr. 1000
To Inventory Adjustment Account 1000
Note:
If the transfer is intrastate, then in the above entry, IGST Receivable (Interim) is replaced by
CGST Receivable (Interim) Account and SGST Receivable (Interim) Account.
• As the transaction is a purchase for the Recipient location, it reflects in GSTR-2A of that location
once the shipment has included the transfer in GSTR-1. The transaction has to undergo
reconciliation at the Recipient location through GST Reconciliation feature and will be
updated in the GST Amount of the Posted Reconciliation table. The credit is also transferred
from Receivable (Interim) Account to Receivable Account. It will be available as Credit in
GST Settlement screen for adjusting against Output tax liability.
C. Transitional Provisions:
• GST is a new regime of tax. The closing credit balances of taxes in old regime such as Central
Excise, Service Tax and VAT are to be brought forward as opening balances under GST regime.
The transitional provisions of Model GST Law guide this transition.
• In the system, the existing General Journals are enhanced to handle this migration.
• User is required to do final settlement of credit available with the payment liability under
different taxes.

• A new field Tax Type has been created for this purpose. The user has to select the appropriate
tax from the drop down of Tax Type field. In addition, the respective Receivable Account is
to be selected from the drop down of Balance Account No. field.
• GST component code to which the transferring balance accrues to also need to be selected in
General Journal lines.
• Amount entered shall be considered as tax amount and it shall be positive. Additionally for
Excise duty, Excise Type is required to be selected from the drop down.
• Once the transactions is generated, the system creates General Ledger entry and Detailed
Ledger Entries along with the Accounting Entries. The entries posted can also be reversed.

10. GST Reconciliation & Credit
Adjustment Journal
A. GST Reconciliation:
a. Purpose of Reconciliation:
• Line wise details of all invoices, supplementary invoices, debit notes and credit notes issued
by a vendor/supplier towards Outward supplies made during a month shall be reported in
GSTR-1 by 10th
of the succeeding month.
• Sales uploaded by the supplier/vendor in GSTR-1 are auto-reflected in GSTR-2A and GSTR-2
of the buyer as Inward supplies. For example, if the buyer purchases goods or services from
100 vendors in a month, the details of all such purchases will be reflected in GSTR-2A & GSTR-
2 of the buyer, provided all 100 vendors have uploaded their sales in GSTR-1.
• Purchase transactions posted in the system for a month shall be reconciled with the supplier-
uploaded information in GSTR-2A. This is because, certain discrepancies may arise between
the two due to the following reasons:
➢ Any supplier or suppliers may ignore to upload invoice details in their GSTR-1
➢ Supplier entering wrong GSTIN of the buyer
➢ Omission of entering any invoice by the buyer
➢ Invoice No. & Date, Tax Amounts may be wrongly entered by the buyer in his ERP/books
of account.
GST Reconciliation
G
S
T
R
-
2
A
Posted
Purchase
Transactions
GSTR-2A

• The buyer can add, modify and delete the auto-populated information in GSTR-2. Such
information is made available to supplier in GSTR-1A. The supplier can accept or reject the
modifications made by the buyer and supplier’s GSTR-1 shall stand amended to the extent of
modifications accepted by him.
• Buyer can avail credit with respect to invoice lines matched with the information in GSTR-2A.
Though buyer can avail mismatched credit on a provisional basis, the same will get auto-
reversed, if the supplier fails to upload invoices.
• To summarize, Reconciliation feature is required to:
➢ Identify the purchase transactions, which are matched/unmatched with GSTR-2A.
➢ To ascertain the modifications required to be made in GSTR-2 and follow up the supplier
to accept the same
➢ Avail credit on matched transactions lines
➢ Monitor unmatched transaction lines, if credit is availed on a provisional basis.
• Hence, every month before uploading GSTR-2 by the buyer, the purchases as per the books
of account of buyer shall be matched with the supplier-uploaded information in GSTR-2A
because this matching is a pre-condition for availing credit.
b. GST Reconciliation in NAV:
• Reconciliation feature in NAV enables the user to reconcile the posted purchase transactions
with GSTR-2A downloaded from GSTN portal.
• Purchase Transactions with Vendor Type – Unregistered, Imports and Composite are excluded
from Reconciliation. [This is due to the reason that unregistered and import vendors are not
Upload GSTR-1 by the
Supplier
Auto drafted GSTR-2A
based on details from
GSTR-1 filed by
counterparty suppliers
Generate GSTR-2 by
accepting, rejecting or
modifying details in
GSTR-2A
modifications made in
GSTR-2 made available
to supplier GSTR-1A
Supplier accepts or
rejects modifications
available in GSTR-1A
GSTR-1 stands
amended to the extent
of modifications
accepted in GSTR-1A

registered with GSTN authorities and hence will not upload their upload supplies in GSTR-1.
Hence the same are not reflected in GSTR-2]
• Multi-lines in an invoice with same HSN/SAC codes are clubbed together and shown as one
line in GST Reconciliation feature.
• Periodic GSTR-2A can be downloaded in Excel or XML format. The following fields in GSTR-2A
is matched with that of GST Reconciliation lines
➢ External Document No.
➢ HSN/SA Codes
➢ Tax Amounts (IGST, CGST, SGST)
➢ GSTIN of the Supplier
➢ Document Date
• Mismatched lines are displayed with error type so that the same can be rectified. If due to any
reason, HSN/SAC codes or External Document is wrongly entered in the system, the same can
be altered by using Update Invoice Details feature.
• GSTR-2A can be downloaded and reconciled with existing GST Reconciliation lines multiple
times, but posting can be done only once in a month.
• For a given month, GST Reconciliation lines include lines pertaining to purchase transactions
posted during the month and the lines, which are posted, reconciled and unmatched during
the previous months.
• Once the GST Reconciliation lines are posted the following entry is generated:
IGST Receivable Account…………….……….Dr. 10000
CGST Receivable Account……………….…….Dr. 10000
SGST Receivable Account………………….….Dr. 10000
Note: Credit is assumed to be Rs. 10000.
• Sum of Amounts pertaining to purchase lines for which GST Credit is Availment and matched with
GSTR-2A lines shall be displayed in the above entry.
• If certain GST reconciliation lines do not match during reconciliation but provisional credit is
availed on the same by means of Credit Adjustment Journal, then amounts in such transactions
are excluded for the above entry.

• The amount in the above entry is also updated in GST Amount of Posted Reconciliation table.
B. Credit Adjustment Journal:
Credit Adjustment Journal is designed to handle certain Credit Adjustments arising on
reconciliation. These adjustments are explained in the table given below:
a. Purpose of Credit Adjustments
S.
No.
Adjustment
made to
Nature of
Adjustment
Purpose of Adjustment
1 Reconciled
lines
Reconciled –
Reversal
This adjustment enables the users to reverse the
availed credit for Reconciliation lines.
Reconciled field is activated, but the availed field is
deactivated and the Nature of Adjustment is
updated as Reconciled-Reversal in Detailed GST
Ledger Entries.
2 Reconciled –
Reversal
Reconciled –
Re-avail
This Adjustment allows the users to re-avail the
reversed credit for reconciled transactions.
Reconciled field is activated, but the availed field is
deactivated due to previous adjustment is also
checked. The nature of adjustment is updated as
Reconciled-Re-Avail in Detailed GST Ledger Entries.
3 Un-
reconciled
Unreconciled –
Avail
This adjustment allows the user to avail credit on
provisional basis for unreconciled transactions.
Availed field is activated and the nature of adjustment
is updated as Unreconciled-Avail in Detailed GST
Ledger Entries.
At a later point of time, when these entries are
reconciled, then Reconciled field is activated.
However, as credit is already availed on this
transaction, GST amount to that extent will not get
updated in Posted Reconciliation table
4 Unreconciled
– Avail
Unreconciled -
Reverse
This adjustment allows the user to reverse the
provisional credit availed on unreconciled
transactions.
Availed field is activated and nature of adjustment is
updated as Unreconciled-Reverse in Detailed GST
Ledger entries.

S.
No.
Adjustment
made to
Nature of
Adjustment
Purpose of Adjustment
At a later point of time, when these entries are
reconciled, then both Reconciled and Availed fields
are activated. The credit amount to that extent will be
updated in Posted Reconciliation table.
5 Unreconciled Unreconciled –
Permanent
Reversal
This adjustment allows the user to reverse a
transaction permanently.
The nature of adjustment is updated as Unreconciled
–Permanent Reversal in Detailed GST Ledger Entry
a. Need for Adjustment
Nature of
Adjustment
Need for Adjustment
Reconciled
Reversal
When the invoices are reconciled, meaning, the transactions in the system
match with the supplier-uploaded information, then credit can be availed
on such transactions.
However, if payment to vendor is not made within ninety days of the date
of invoice, the credit availed may be reversed. This adjustment handles the
scenario where reconciled credit needs to be adjusted due to any reason.
Reconciled –
Re-avail
In the above scenario, credit is reversed due to the reason that vendor
payment is not made within ninety days. Subsequently, if the vendor
payment is made, then the reversed credit can be re-availed. Hence, this
adjustment allows the user to re-avail the reconciled credit due to any
reason.
Unreconciled-
Avail
Model GST Law allows the user to take provisional credit. However, such
provisional credit shall be matched with the supplier-uploaded
information within a prescribed period. Otherwise, the availed credit is
required to be reversed. The user by using this option can avail credit on
any unreconciled purchase lines.
Unreconciled -
Reversal
If Provisional Credit is availed and credit remains unmatched, then after a
prescribed period, the credit gets auto-reversed in Credit ledger of GSTN
Portal. This adjustment enables the user reverse such credit availment in
the books of account.
Unreconciled –
Permanent
Reversal
If the user is certain that the vendor will never upload the invoice
information in GSTN portal, then the user can reverse the credit posted to
Receivable (Interim) Account and expense the same.
b. Accounting Entries:

Nature of
Adjustment
Document
Type
Debit Credit
Reconciled
Reversal
Invoice Receivable (Interim) Account Receivable Account
Credit
Memo
Receivable Account Receivable (Interim) Account
Reconciled –
Re-avail
Invoice Receivable Account Receivable (Interim) Account
Credit
Memo
Receivable (Interim) Account Receivable Account
Unreconciled-
Avail
Invoice Receivable Account Receivable (Interim) Account
Credit
Memo
Receivable (Interim) Account Receivable Account
Unreconciled
- Reversal
Invoice Receivable (Interim) Account Receivable Account
Credit
Memo
Receivable Account Receivable (Interim) Account
Unreconciled
– Permanent
Reversal
Invoice Expense Account Receivable (Interim) Account
Credit
Memo
Receivable (Interim) Account Expense Account
Note: If the transaction is intrastate, then the amounts are posted to CGST
Receivable/Receivable (Interim) Accounts. If the transaction is interstate, then the amounts
are posted to IGST Receivable/Receivable (Interim) Accounts.

11. GST Settlement & Posted
Reconciliation Table
A. GST Settlement
a. Background:
• Settlement refers to discharge of tax liability to the government. Tax liability arises under two
scenarios:
➢ Outward Supplies (Sales, Transfers)
➢ Inward Supplies that are subject to Reverse charge (Purchases, inward transfers)
• This tax liability on both interstate transactions (IGST) and intrastate transactions (SGST, CGST)
is to be discharged on a monthly basis to the government. GST paid on purchase transactions
can be taken as credit subject to certain conditions. Such credit can be offset against the tax
payable on Sales.
• Hence, GST payable on sales transactions can be discharged by payment of cash or utilization
of credit or both. Credit utilized can be credit pertaining to the same component or different
components. As per Model GST Law, credit of IGST, CGST and SGST shall be claimed in the
chronological order as given below:
Credit of To be Adjusted against
IGST ✓ IGST
✓ CGST
✓ SGST
CGST ✓ CGST
✓ IGST
SGST ✓ SGST
✓ IGST
• Claim Setoff Table: In order to permit users to define cross credit utilization, Claim Setoff
table has been provided (GST Components – Actions). For each component of tax, the cross
credit component and its priority can be assigned in this table. To illustrate, for discharging
IGST liability, credits of CGST and SGST can be used. Similarly, CGST liability and SGST liability
can be offset with IGST liability. This can be claimed in the Claim Setoff table as given below:
GST Component GST Set-off Component Priority
IGST CGST 1
IGST SGST 2
CGST IGST 1
SGST IGST 1

The first priority for any component would be that component itself. This logic is inbuilt. The
above table is setting priorities for other components.
• Reverse charge Liability shall always be discharged in cash. Credit can be availed in the month
of tax remittance to the government.
• For Outward supplies, GSTR-1 is to be filed monthly by 10th
of the succeeding month. Based
on the transactions reported in the return, Output liability is determined. GSTR-2 is the inward
supply return, which is required to be filed by the 15th
of the succeeding month. This return
determines the credit that can be availed. Three ledgers are maintained on the GSTN portal –
Liability ledger, Credit Ledger and Payment ledger. Liability ledger is updated based upon
GSTR-1 filed, Credit ledger is updated based upon GSTR-2 filed and Cash ledger is updated
on tax payment made in cash.
• As on date, it is not clear, whether the taxpayer has to offset the available credit compulsorily
or liability can be discharged in his own way either utilizing credit fully or partly or discharging
entire liability in cash, despite availment of credit. GSTR-3 does not contain any tables where
this sort of tax planning can be done.
• Hence there should be some mechanism in the system where by user can record the Tax
Liability, Credit availed, Credit utilized and cash payment made in cash, which is called
Settlement. In a word to say, system should replicate the settlement process done in GSTN
portal but in a bit different way.
• For GSTN portal, the returns filed becomes the source for accomplishing the process. As the
transactions are posted in the system itself, the tax entries generated by posted transactions
becomes the source for accomplishing the process of settlement and GST Settlement screen
becomes the venue where such process is accomplished.
• Settlement is classified into four parts in GST Settlement screen.
➢ Sales Liability
➢ Reverse charge -Advance Tax Liability
➢ Reverse charge – Invoice Liability
➢ Export Sales Liability
b. Sales liability:
• The net liability of the following transactions are shown in Tax Liability:
➢ Advance Receipt
➢ Refund
➢ Reversal of Advance Receipt
➢ Transactions posted through sales documents
➢ Credit Memo

• Credit Availed flows from Posted Reconciliation table. It is the sum of GST amount and
brought forward amount from the previous month. Credit Utilized shall be auto populated by
the system based on the priorities set out in Claim Set-off table. However, the user can edit
the same.
• The auto population of credit utilization shall be based on the assumption that unless the
credit availed – both own credit (Credit of the component itself) and cross credit (credit of
other components) is utilized fully, cash payment for a particular component shall not arise.
• Examples for auto-population of Credit Utilized field in GST Settlement
Settlement entirely through Credit (System auto-populates credit utilized as given in the
example)
GST
Component
Tax Liability Credit Availed Credit Utilized Tax Liability
IGST 20000 10000 20000 0
CGST 10000 15000 10000 0
SGST 15000 20000 15000 0
Assuming the priority set out in Claim Set-off table given above, each component’s credit is
utilized first for that component itself. Any balance left over can be utilized for discharging tax
liability of other components.
In the given example, SGST Tax liability is Rs.15000 and Credit Available is Rs. 20000. The credit
is utilized for discharging SGST liability first. Balance Credit of Rs. 5000 (20000-15000) is used
for discharging IGST liability.
CGST Tax liability is Rs.10000 and Credit Available is Rs. 15000. The credit is utilized for
discharging CGST liability first. Balance Credit of Rs. 5000 (15000-10000) is used for
discharging IGST liability.
IGST Tax liability is Rs.20000 and Credit Available is Rs. 10000. The credit utilized becomes Rs.
20000, which is sum of IGST Credit – Rs. 10000, CGST balance Credit 5000 and SGST balance
credit Rs. 5000.
Settlement through partly credit and partly cash: (System auto-populates credit utilized
as given in the example)
GST
Component
Tax Liability Credit Availed Credit Utilized Tax Liability
IGST 30000 10000 15000 5000
CGST 10000 15000 10000 0

SGST 25000 20000 20000 5000
In the given example, SGST Tax liability is Rs.25000 and Credit Available is Rs. 20000. After
utilizing credit, the balance amount of Rs. 5000 is to be payable by cash.
CGST Tax liability is Rs.10000 and Credit Available is Rs. 15000. The credit is utilized for
discharging CGST liability first. Balance Credit of Rs. 5000 (15000-10000) is used for
discharging IGST liability.
IGST Tax liability is Rs.20000 and Credit Available is Rs. 10000. The credit utilized becomes Rs.
15000, which is sum of IGST Credit – Rs. 10000 and CGST balance credit 5000. After utilizing
credit, the balance amount of Rs. 5000 is to be payable by cash.
• As said earlier, auto-populated credit utilized field can be edited by the user. However, if credit
availed for any component is less than or equal to the tax liability and if the credit availed is
not utilized in full, then the same cannot be utilized for other components. It will be carried
forward to next month.
• If credit availed for any component is greater than the tax liability and the credit is not utilized
in full for that component, then the credit that can be carried forward to the cross components
would be Credit Availed – Tax Liability. Remaining credit shall be carried forward to the next
month.
• Examples if the user edits Credit Utilized field manually:
GST
Component
Tax
Liability
Credit
Availed
Credit
Utilized
Payment Carried
forward to
next month
IGST 20000 10000 15000 5000 0
CGST 10000 15000 5000 0 0
SGST 15000 10000 5000 5000 5000
In the given example, SGST is having Tax Liability of Rs. 15000 and the Credit Availed is Rs.
10000. Here Credit Availment is less than the tax liability and the user is utilizing only Rs. 5000
credit. Hence, the remaining credit cannot be utilized for other components but the same will
be carried forward to next month.
Tax Liability of CGST is Rs. 10000 and Credit Availed is Rs 15000. This is the case where credit
Availed is more than Tax Liability. However, credit utilized is Rs. 5000. The difference between
Tax Liability and Credit Availed is Rs. 5000 (15000-10000) which is used against IGST liability.
The difference between Tax Liability and Credit Utilized will be carried forward to next month.

• Other Validations:
➢ Credit cannot be utilized for payment of interest, penalty, fees and others. They shall
always be paid in cash.
➢ Credit Utilized and Payment amount shall not exceed tax liability.
➢ Total Credit utilized for a particular component shall not exceed total credit availed of
that components plus Surplus credit of other components prioritized in claim-set off
table for such component.
➢ Account No. and Account Type shall be the same for all tax components. However,
Interest Account, Fees Account, Penalty Account and Others Account can be defined
differently for different tax components.
• Example for Accounting Entry:
GST Component Tax Liability Credit Availed Credit Utilized Payment
IGST 20000 10000 15000 5000
CGST 10000 15000 10000 0
SGST 15000 10000 10000 5000
Accounting Entry:
IGST Payable Account………………….…Dr. 20000
CGST Payable Account……….………..…Dr. 10000
SGST Payable Account………….………..Dr. 15000
To IGST Receivable Account 10000
To CGST Receivable Account 15000
To SGST Receivable Account 10000
• After posting the entry, Paid field in GST Detailed Ledger Entry of Advance Payment & Invoice
shall be activated. Posted GST Reconciliation is also to be updated with Credit Utilized and
Carry Forward fields.
c. Reverse Charge Advance Payment Liability:
• The net liability of the following transactions that are subject to Reverse charge are shown in
Tax Liability:
➢ Advance Receipt
➢ Refund
➢ Reversal of Advance Receipt

• Credit Availed will always be zero for Reverse Charge transactions. The entire liability is to
be discharged in cash.
• Example and Accounting Entries:
GST
Component
Tax
Liability
Credit
Availed
Credit Utilized
IGST 20000 0 0
CGST 10000 0 0
SGST 15000 0 0
Accounting Entry for discharge of Advance payment liability
IGST Payable Account………………Dr. 20000
CGST Payable Account…….………Dr. 10000
SGST Payable Account…………….Dr. 15000
Accounting Entry for discharge of Advance payment liability applied to invoice and
paid Boolean in Detailed GST Ledger Entry is not checked.
IGST Receivable Account….….……Dr. 10000
CGST Receivable Account…….……Dr. 5000
SGST Receivable Account…………..Dr. 7500
The amounts in the above entry are sample amounts assuming that half of the advance
payment are advance payments for which Paid field is not activated in GST Detailed Ledger
Entry and are applied to invoices.
When the tax liability on advance payment is yet to be discharged and it is applied to an
invoice, then credit can be availed to the extent of applied amount in advance payment once
the tax remittance is made to the government, in the month of payment to government. GST
amount field in Posted Reconciliation table shall be updated accordingly.
d. Reverse charge Invoice Liability:
• The net liability of the following transactions are shown in Tax Liability:
➢ Purchase transactions that are subject to Reverse Charge and are posted through
posted documents.
➢ Credit Memo

Example:
GST
Component
Tax Liability Credit Availed Credit Utilized
IGST 20000 0 0
CGST 10000 0 0
SGST 15000 0 0
Accounting Entry when the liability on Invoice is discharged
IGST Payable Account……………Dr. 20000
CGST Payable Account…………..Dr. 10000
SGST Payable Account………...…Dr. 15000
IGST Receivable Account…….….Dr. 20000
CGST Receivable Account……....Dr. 10000
SGST Receivable Account………Dr. 15000
Flow of Detailed GST Ledger Entries in Settlement screen
Scenario Payment Liability GST Amount in Posted Reconciliation
Table
Advance
Payment
Initial Entry of Advance
Payment, Refund shall appear
as Payment Liability
----
Invoice Initial Entry of Invoice and
Credit Memo shall appear as
Payment Liability
Initial Entry
Advance
Payment (Paid
Boolean is
checked)
applied to
Invoice
Net Entry (Initial Entry-
Application Entry) of Invoices
and Credit memo shall
appear as Payment Liability.
Net Entry (Initial Entry-Application
Entry) of Invoices and Credit memo
shall appear as Payment Liability.
Advance
Payment (Paid
Boolean is
checked)
applied to
Invoice
Net Entry (Initial Entry-
Application Entry) of Invoices
and Credit memo shall
appear as Payment Liability.
Net Entry (Initial Entry-Application
Entry) of Invoices and Credit memo
shall appear in GST amount once they
are posted in settlement screen.

e. Export Liability:
All Export related transactions except those for which without payment of duty is checked shall
flow here. Entries and validations would be the same as they are for normal sales.
A. Posted Reconciliation Table:
Field Description
GSTIN No. GSTIN of the location to be entered
Reconciliation Month Month of the Reconciliation
Reconciliation Year Year of the Reconciliation
GST Component GST Component
GST Amount Note: 1
GST Prev. Period B/F Amount Note: 2
GST Amount Utilized Note: 3
GST Prev. Period C/F Amount Note: 4
Note 1: GST Amount field shall contain the following:
• GST Amount pertaining to reconciled transactions shall be updated in GST amount, at the time of
posting Reconciliation, for the month, reconciliation is being done.
• Any adjustments made with the following nature of adjustment shall be updated in GST Amount,
at the time of posting such adjustments in Credit Adjustment Journal.
➢ Reconciled – Reversal
➢ Reconciled – Reavail
➢ Unreconciled-Avail
➢ Unreconciled-Reversal
• Based on the posting date in the Credit Adjustment Journal system updates the Posted
Reconciliation page against the relevant month.
• GST Amount in Advance Payments applied to an invoice is updated in posted reconciliation
table, once they are settled in the GST Settlement page. Such advance payments have, the
Reverse Charge field is activated and the Paid field is deactivated in the GST Detailed Ledger
Entry page.
• Applied to an invoice are updated in the posted reconciliation table.

• GST Amount in Advance Payments with both the Reverse Charge field and the Paid field
activated in the GST Detailed Ledger Entry page and are applied to an invoice are updated
in the posted reconciliation table in the month of application.
• Net Entries (Initial entry – Application entry) of Invoices and Credit Memos for which GST
Group Type is goods and Reverse Charge is activated in Detailed Ledger Entry shall be
updated in field GST Amount of Posted Reconciliation table once they are posted in GST
Settlement screen.
• Settlement can be done even if reconciliation has not been done. The application shall create
a line for the month, even reconciliation is not done but any or all transactions specified in b,
c, d, e and f are posted.
• GST Amount shall always be positive. If due to credit adjustments it is negative, then the same
shall be updated as zero and the amount shall be deducted from Previous Period B/F Amount.
If Previous period B/F amount is also zero, then the same shall be added to Payment liability
(Nature of liability selected as sales) in GST Settlement screen.
Note 2
GST Prev.Period B/F Amount:
• Carried Forward amount of previous period becomes Brought forward amount of the next period.
Note 3
GST Amount Utilized:
• The following example depicts the amount to be updated in GST amount Utilized field:
GST
Component
Tax
Liability
Credit
Availed
Credit Utilized in
GST Settlement
Screen
Credit Utilized amount
in Posted Reconciliation
table
IGST 20000 10000 20000 (10000
+CGST-
5000+SGST-5000)
10000
CGST 10000 15000 10000 15000
SGST 15000 30000 15000 20000
Note 4
GST Prev.Period C/F amount:
• GST Amount – GST Credit Utilized of a selected period gives the amount that can be carried
forward to the next period.

12. Document Reports
The following Document Reports are included for GST in the product. They are:
• General Journal – Test Report
• Sales Document – Test Report
• Sales - Quote
• Order Confirmation
• Sales - Invoice
• Sales - Credit Memo
• Blanket Sales Order
• Archived Sales Quote
• Archived Sales Order
• Purchase Document – Test Report
• Purchase - Quote
• Order
• Purchase - Invoice
• Purchase - Credit Memo
• Archived Purchase Quote
• Archived Purchase Order
• Archived Purchse Return Order
• Archived Sales Return Order
• Service Order
• Service Quote
• Service - Invoice
• Service Document – Test Report
• Return Order Confirmation
• Return Order
• GSTR-1 (to be updated with recent changes)
• GSTR-2 (to be uodated with recent changes)

13. Scope Exclusions for this release
• Normal Payment Application with respect to Import of Services and Services
procured from Unregistered Vendor (Purchase Reverse Charge Scenarios for
Services)
• Exempted Goods and Services Scenarios
• Apply to Oldest feature for Advance Payment Application
• Service Tansfers between interstate/intrastate locations within the same legal entity
• Mutiline Bank Cheque payment
• Refund of Mutiple Payments
• Additional Reporting Currency

14. Code Box Section
A. GST Calculation:
Result := 0;
CallLevel := CallLevel + 1;
WHILE (STRLEN(Expression) > 1) AND (Expression[1] = ' ') DO
Expression := COPYSTR(Expression,2);
IF Expression <> '' THEN
WHILE (STRLEN(Expression) > 1) AND (Expression[STRLEN(Expression)] = ' ') DO
Expression := COPYSTR(Expression,1,STRLEN(Expression) - 1);
IF STRLEN(Expression) > 0 THEN BEGIN
Parantheses := 0;
IsExpression := FALSE;
Operators := '+-*/^';
OperatorNo := 1;
REPEAT
i := STRLEN(Expression);
REPEAT
IF Expression[i] = '(' THEN
Parantheses := Parantheses + 1
ELSE
IF Expression[i] = ')' THEN
Parantheses := Parantheses - 1;
IF (Parantheses = 0) AND (Expression[i] = Operators[OperatorNo]) THEN
IsExpression := TRUE
ELSE
i := i - 1;
UNTIL IsExpression OR (i <= 0);
IF NOT IsExpression THEN
OperatorNo := OperatorNo + 1;

UNTIL (OperatorNo > STRLEN(Operators)) OR IsExpression;
IF IsExpression THEN BEGIN
IF i > 1 THEN
LeftOperand := COPYSTR(Expression,1,i - 1)
ELSE
LeftOperand := '';
IF i < STRLEN(Expression) THEN
RightOperand := COPYSTR(Expression,i + 1)
ELSE
RightOperand := '';
Operator := Expression[i];
LeftResult :=
EvaluateExpressioninGSTFormula(
IsTestExpression,LeftOperand,TransactionType,DocumentType,DocumentNo,
LineNo,ItemChargeDocType,ItemChargeDocNo,ItemChargeLineNo);
RightResult :=
EvaluateExpressioninGSTFormula(
IsTestExpression,RightOperand,TransactionType,DocumentType,DocumentNo,LineNo,
ItemChargeDocType,ItemChargeDocNo,ItemChargeLineNo);
CASE Operator OF
'^':
Result := POWER(LeftResult,RightResult);
'*':
Result := LeftResult * RightResult;
'/':
IF RightResult = 0 THEN
Result := 0
ELSE
Result := LeftResult / RightResult;
'+':

Result := LeftResult + RightResult;
'-':
Result := LeftResult - RightResult;
END;
WITH GSTSetup DO BEGIN
SETRANGE("GST State Code",GSTStateCode);
SETRANGE("GST Group Code",GSTGroupCode);
SETRANGE("GST Component",GSTComponentCode);
IF EffectiveDate = 0D THEN
SETFILTER("Effective Date",'<=%1',WORKDATE)
ELSE
SETFILTER("Effective Date",'<=%1',EffectiveDate);
IF FINDLAST THEN
EXIT("GST Component");
SETRANGE("GST State Code");
SETRANGE("GST State Code",'');
IF FINDLAST THEN
EXIT("GST Component");
END;
WITH GSTAccountingSubPeriod DO BEGIN
SETRANGE("New Financial Year",TRUE);
SETFILTER("Starting Date",'<=%1',PostingDate);
IF FINDLAST THEN BEGIN
SETFILTER("Starting Date",'>=%1',PostingDate);
IF NOT FINDFIRST THEN
ERROR(AccountingPeriodErr,PostingDate);
GSTAccountingPeriod.GET("Accounting Period Start Date");
END ELSE
ERROR(AccountingPeriodErr,PostingDate);
END;

WITH GSTAccountingSubPeriod DO BEGIN
SETRANGE("New Financial Year",TRUE);
SETRANGE(Closed,FALSE);
SETFILTER("Starting Date",'<=%1',PostingDate);
IF FINDLAST THEN BEGIN
SETFILTER("Starting Date",'>=%1',PostingDate);
IF NOT FINDFIRST THEN
ERROR(
STRSUBSTNO(
PeriodClosedErr,GSTAccountingPeriod."Starting Date",
GSTAccountingPeriod."Ending Date",PostingDate));
END ELSE
ERROR(
STRSUBSTNO(
PeriodClosedErr,GSTAccountingPeriod."Starting Date",
GSTAccountingPeriod."Ending Date",PostingDate));
END;
Sales Posting
SalesLine.SETRANGE("Document Type",DocumentType);
SalesLine.SETRANGE("Document No.",DocumentNo);
SalesLine.SETRANGE("Line No.",LineNo);
IF SalesLine.FINDFIRST THEN BEGIN
"Document Type" := SalesHeader."Document Type";
"Document No." := SalesHeader."No.";
"Posting Date" := SalesHeader."Posting Date";
Type := SalesLine.Type;
"No." := SalesLine."No.";
"Source No." := SalesLine."Bill-to Customer No.";
Quantity := SalesLine.Quantity * Sign;
"HSN/SAC Code" := SalesLine."HSN/SAC Code";

"Location Code" := SalesLine."Location Code";
"Line No." := SalesLine."Line No.";
"Source Type" := "Source Type"::Customer;
"Invoice Type" := SalesHeader."Invoice Type";
UpdateSalesGSTRegNo(DetailedGSTEntryBuffer,SalesHeader,SalesLine);
IF IsExempted(SalesHeader) THEN BEGIN
GSTPercentage := 0;
GSTAmount := 0;
END;
"GST Input/Output Credit Amount" := Sign * GSTAmount;
"GST Base Amount" := GSTBaseAmount * Sign;
"GST Amount" := GSTAmount * Sign;
"GST Base Amount (LCY)" :=
ConvertGSTBaseAmountToLCY(CurrencyCode,"GST Base Amount",CurrencyFactor,"Posting
Date");
"GST Amount (LCY)" :=
ConvertGSTBaseAmountToLCY(CurrencyCode,"GST Amount",CurrencyFactor,"Posting
Date");
"GST %" := GSTPercentage;
END;
WITH DetailedGSTLedgerEntry DO BEGIN
INIT;
"Entry No." := GetNextGSTDetailEntryNo;
"Entry Type" := "Entry Type"::"Initial Entry";
"Transaction Type" := "Transaction Type"::Sales;
"Document Type" := DocumentType;
"Document No." := DocumentNo;
"External Document No." := SalesHeader."External Document No.";
"Posting Date" := SalesHeader."Posting Date";
"Source Type" := "Source Type"::Customer;

Type := SalesLine.Type;
IF DetailedGSTEntryBuffer."Item Charge Assgn. Line No." = 0 THEN
"No." := SalesLine."No."
ELSE
"No." := DetailedGSTEntryBuffer."No.";
"Nature of Supply" := SalesHeader."Nature of Supply";
"GST Place of Supply" := DetailedGSTEntryBuffer."GST Place of Supply";
DetailedGSTEntryBuffer.TESTFIELD("Location Code");
DetailedGSTEntryBuffer.TESTFIELD("Location State Code");
DetailedGSTEntryBuffer.TESTFIELD("Location Reg. No.");
"Location Code" := DetailedGSTEntryBuffer."Location Code";
"Buyer/Seller State Code" := DetailedGSTEntryBuffer."Buyer/Seller State Code";
"Buyer/Seller Reg. No." := DetailedGSTEntryBuffer."Buyer/Seller Reg. No.";
"Shipping Address State Code" := DetailedGSTEntryBuffer."Shipping Address State
Code";
"Location Reg. No." := DetailedGSTEntryBuffer."Location Reg. No.";
"Location State Code" := DetailedGSTEntryBuffer."Location State Code";
B. Purchase Posting
PurchaseLine.SETRANGE("Document Type",DocumentType);
PurchaseLine.SETRANGE("Document No.",DocumentNo);
PurchaseLine.SETRANGE("Line No.",LineNo);
IF PurchaseLine.FINDFIRST THEN BEGIN
"Document Type" := PurchaseHeader."Document Type";
"Document No." := PurchaseHeader."No.";
"Posting Date" := PurchaseHeader."Posting Date";
Type := PurchaseLine.Type;
"No." := PurchaseLine."No.";
"Source No." := PurchaseLine."Buy-from Vendor No.";
Quantity := PurchaseLine.Quantity;

"HSN/SAC Code" := PurchaseLine."HSN/SAC Code";
"Location Code" := PurchaseLine."Location Code";
"Line No." := PurchaseLine."Line No.";
"Source Type" := "Source Type"::Vendor;
IF PurchaseHeader."GST Vendor Type" IN
[PurchaseHeader."GST Vendor Type"::Composite,PurchaseHeader."GST Vendor
Type"::Exempted]
THEN BEGIN
GSTPercentage := 0;
GSTAmount := 0;
END ELSE
IF PurchaseLine."GST Credit" = PurchaseLine."GST Credit"::Availment THEN
"GST Input/Output Credit Amount" := Sign * GSTAmount
ELSE
"Amount Loaded on Item" := Sign * GSTAmount;
"GST Base Amount" := GSTBaseAmount * Sign;
"GST Amount" := GSTAmount * Sign;
"GST Base Amount (LCY)" := ConvertGSTBaseAmountToLCY(CurrencyCode,"GST Base
Amount",CurrencyFactor,"Posting Date") ;
"GST Amount (LCY)" := ConvertGSTBaseAmountToLCY(CurrencyCode,"GST
Amount",CurrencyFactor,"Posting Date") ;
"GST %" := GSTPercentage;
UpdatePurchaseGSTRegNo(DetailedGSTEntryBuffer,PurchaseHeader,PurchaseLine);
END;
WITH DetailedGSTLedgerEntry DO BEGIN
INIT;
"Entry No." := GetNextGSTDetailEntryNo;
"Entry Type" := "Entry Type"::"Initial Entry";
"Transaction Type" := "Transaction Type"::Purchase;
"Document Type" := DocumentType;
"Document No." := DocumentNo;

IF PurchaseHeader."Vendor Invoice No." <> '' THEN
"External Document No." := PurchaseHeader."Vendor Invoice No.";
IF PurchaseHeader."Vendor Cr. Memo No." <> '' THEN
"External Document No." := PurchaseHeader."Vendor Cr. Memo No.";
"Posting Date" := PurchaseHeader."Posting Date";
"Source Type" := "Source Type"::Vendor;
Type := PurchaseLine.Type;
IF DetailedGSTEntryBuffer."Item Charge Assgn. Line No." = 0 THEN
"No." := PurchaseLine."No."
ELSE
"No." := DetailedGSTEntryBuffer."No.";
DetailedGSTEntryBuffer.TESTFIELD("Location Code");
DetailedGSTEntryBuffer.TESTFIELD("Location State Code");
DetailedGSTEntryBuffer.TESTFIELD("Location Reg. No.");
"Location Code" := DetailedGSTEntryBuffer."Location Code";
"Location Reg. No." := DetailedGSTEntryBuffer."Location Reg. No.";
"Location State Code" := DetailedGSTEntryBuffer."Location State Code";
Vendor.GET(PurchaseHeader."Buy-from Vendor No.");
C. GST Application
WITH GSTApplicationBuffer[1] DO BEGIN
IF DetailedGSTEntryBuffer."Transaction Type" = DetailedGSTEntryBuffer."Transaction
Type"::Service THEN
"Transaction Type" := DetailedGSTEntryBuffer."Transaction Type"::Sales
ELSE
"Transaction Type" := DetailedGSTEntryBuffer."Transaction Type";
"Original Document Type" := InvoiceDocType;
"Original Document No." := InvoiceDocNo;
"Account No." := AccountNo;
"HSN/SAC Code" := DetailedGSTEntryBuffer."HSN/SAC Code";

"GST Group Type" := DetailedGSTEntryBuffer."GST Group Type";
"GST Component Code" := DetailedGSTEntryBuffer."GST Component Code";
"Current Doc. Type" := InvoiceDocType;
QtyFactor :=
GetQtyFactor(
TransactionType,DetailedGSTEntryBuffer."Document Type",
DetailedGSTEntryBuffer."Document No.",DetailedGSTEntryBuffer."Line No.");
"Current Doc. Type" := DetailedGSTEntryBuffer."Document Type";
"Currency Code" := DetailedGSTEntryBuffer."Currency Code";
"Currency Factor" := DetailedGSTEntryBuffer."Currency Factor";
"GST Rounding Precision" := DetailedGSTEntryBuffer."GST Rounding Precision";
"GST Rounding Type" := DetailedGSTEntryBuffer."GST Rounding Type";
"Charge To Cust/Vend" := DetailedGSTEntryBuffer."Charge To Cust/Vend";
"TDS/TCS Amount" := DetailedGSTEntryBuffer."TDS/TCS Amount";
"GST Base Amount" := ROUND(DetailedGSTEntryBuffer."GST Base Amount" * QtyFactor,0.01);
"GST Amount" :=
GSTManagement.RoundGSTPrecision(DetailedGSTEntryBuffer."GST Amount" * QtyFactor);
"GST Cess" := DetailedGSTEntryBuffer.Cess;
END;
GSTApplicationBuffer[2] := GSTApplicationBuffer[1];
IF GSTApplicationBuffer[2].FIND THEN BEGIN
GSTApplicationBuffer[2]."GST Base Amount" += GSTApplicationBuffer[1]."GST Base Amount";
GSTApplicationBuffer[2]."GST Amount" += GSTApplicationBuffer[1]."GST Amount";
GSTApplicationBuffer[2]."Charge To Cust/Vend" += GSTApplicationBuffer[1]."Charge To
Cust/Vend";
GSTApplicationBuffer[2]."TDS/TCS Amount" += GSTApplicationBuffer[1]."TDS/TCS Amount";
GSTApplicationBuffer[2].MODIFY(TRUE);
END ELSE
GSTApplicationBuffer[2].INSERT(TRUE);
IF (AppliedAmount <> 0) AND (InvoiceAmount <> 0) THEN BEGIN

IF ABS(AppliedAmount) >= ABS(InvoiceAmount) THEN BEGIN
AmounttoApply := 0;
ERROR(STRSUBSTNO(ExceedHSNAmtErr,AmounttoApply,HSNSAC));
END;
AmountRequired := ABS(AppliedAmount) + ABS(AmounttoApply) - ABS(InvoiceAmount);
IF AmountRequired <= 0 THEN
EXIT;
IF TransactionType = TransactionType::Sales THEN
Sign := -1;
AmountRequired *= Sign;
IF AmountRequired <> AmounttoApply THEN BEGIN
AmounttoApply := ABS(InvoiceAmount) - ABS(AppliedAmount);
IF TransactionType = TransactionType::Sales THEN
AmounttoApply *= Sign;
IF ShowWarning THEN
ERROR(STRSUBSTNO(ExceedHSNAmtErr,AmounttoApply,HSNSAC));
END;
END;
IF NOT "GST Cess" THEN
"Applied Base Amount" := ROUND("GST Base Amount" * InvoiceBaseAmount / "GST Base
Amount",0.01)
ELSE
"Applied Base Amount" :=
ROUND(
"GST Base Amount" *
GetInvoiceGSTComponentWise(GSTApplicationBuffer1,DocumentType,DocumentNo,TRUE) /
"GST Base Amount",0.01);
"Applied Amount" :=
GSTApplicationRound(GSTRoudingType,GSTRoundingPrecision,"GST Amount" *

GetInvoiceGSTComponentWise(GSTApplicationBuffer1,DocumentType,DocumentNo,FALSE) /
"GST Amount");
D. GST Settlement
IF IsGSTPaymentApplicable(GSTPaymentBuffer) THEN BEGIN
Window.UPDATE(1,"GST Component Code");
GSTPostingSetup.GET("Location State Code","GST Component Code");
TotalPaymentAmount += "Payment Amount" + Interest + Penalty + Fees + Others;
IF "Net Payment Liability" > 0 THEN
CreateAndPostGenJournalLine(
"Account Type"::"G/L Account",GSTPostingSetup.GetPayableAccount(GSTPostingSetup),
"Net Payment Liability",STRSUBSTNO(GSTPaymentTypeTxt,"GST Component
Code",NetPaymentLibTxt));
IF Interest > 0 THEN
"Account Type"::"G/L Account","Interest Account No.",Interest,
STRSUBSTNO(GSTPaymentTypeTxt,"GST Component Code",FIELDCAPTION(Interest)));
IF Penalty > 0 THEN
"Account Type"::"G/L Account","Penalty Account No.",Penalty,
STRSUBSTNO(GSTPaymentTypeTxt,"GST Component Code",FIELDCAPTION(Penalty)));
IF Fees > 0 THEN
"Account Type"::"G/L Account","Fees Account No.",Fees,
STRSUBSTNO(GSTPaymentTypeTxt,"GST Component Code",FIELDCAPTION(Fees)));
IF Others > 0 THEN
"Account Type"::"G/L Account","Others Account No.",Others,
STRSUBSTNO(GSTPaymentTypeTxt,"GST Component Code",FIELDCAPTION(Others)));
CASE "Nature of Tax Liability" OF

"Nature of Tax Liability"::Sales,"Nature of Tax Liability"::"Export Sales":
BEGIN
IF "Credit Availed" < "Credit Utilized" THEN
ReceivableAmount := "Credit Availed" + "Surplus Cr. Utilized"
ELSE
ReceivableAmount := "Credit Utilized" + "Surplus Cr. Utilized";
IF ReceivableAmount > 0 THEN
"Account Type"::"G/L Account",GSTPostingSetup.GetRecAccount(GSTPostingSetup),
ReceivableAmount * Sign,STRSUBSTNO(GSTPaymentTypeTxt,"GST Component
Code",CreditUtilizedTxt));
END;
"Nature of Tax Liability"::"Reverse Charge - Advance Payment":
IF "Applied Advance Amount" > 0 THEN BEGIN
"Applied Advance Amount",STRSUBSTNO(GSTPaymentTypeTxt,"GST Component
Code",AppliedAdvAmountTxt));
"Account Type"::"G/L
Account",GSTPostingSetup.GetRecAccountInterim(GSTPostingSetup),
"Applied Advance Amount" * Sign,STRSUBSTNO(GSTPaymentTypeTxt,"GST
Component Code",AppliedAdvAmountTxt));
END;
"Nature of Tax Liability"::"Reverse Charge - Invoice":
IF "Net Payment Liability" > 0 THEN BEGIN
"Net Payment Liability",STRSUBSTNO(GSTPaymentTypeTxt,"GST Component

"Account Type"::"G/L
Account",GSTPostingSetup.GetRecAccountInterim(GSTPostingSetup),
"Net Payment Liability" * Sign,STRSUBSTNO(GSTPaymentTypeTxt,"GST Component
END;

(c) 2016 Microsoft Corporation. All rights reserved. This document is provided "as-is." Information and views expressed in this document, including URL
and other Internet Web site references, may change without notice. You bear the risk of using it. Some examples are for illustration only and are fictitious.
No real association is intended or inferred.
This document does not provide you with any legal rights to any intellectual property in any Microsoft product. You may copy and use this document for
your internal, reference purposes.

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