Sales Accounting, GST Awareness and Financial Transactions
Sales accounting basics
An invoice records a sale; a credit note records a sales return or reduction; a debit note records a purchase return. The cash book records receipts and payments, the ledger groups accounts and the trial balance checks debit and credit totals. Gross sales minus returns gives net sales.
GST rules
GST is destination-based. Intra-state supplies attract CGST plus SGST; inter-state supplies attract IGST. A tax invoice needs GSTIN, invoice number and date, HSN or SAC, taxable value, rate, tax amount and place of supply. Input tax credit requires a valid business invoice. The composition scheme is simpler but usually denies input tax credit. Rates, thresholds and composition limits change by notification, so verify current rules rather than memorising stale figures. Do not charge GST on exempt goods.
Worked example
Taxable value is ₹1,000 and GST is 18% on an intra-state sale. CGST at 9% is ₹90, SGST at 9% is ₹90 and the total is ₹1,180. If the MRP is ₹1,180 inclusive of GST, taxable value is 1,180 ÷ 1.18 = ₹1,000 and tax is ₹180. Never add GST on top of an inclusive MRP.
Traps
Splitting IGST into CGST and SGST for an inter-state sale, claiming input tax credit on personal purchases, forgetting rounding rules and issuing an invoice without GSTIN are serious errors.