Journal Entries for Common Business Transactions in India

Journal entries for common business transactions — sale, purchase, GST, salary and depreciation entries with Indian examples.

The Golden Rules of Double Entry

Indian bookkeeping is built on three classical rules — Debit what comes in and credit what goes out for real accounts (cash, bank, fixed assets); debit the receiver and credit the giver for personal accounts (debtors, creditors, capital); debit all expenses and losses and credit all incomes and gains for nominal accounts. The modern equivalent uses the accounting equation — Assets = Liabilities + Equity — where assets and expenses increase on the debit side, while liabilities, equity and income increase on the credit side. Every transaction must have at least one debit and one credit, and the totals must always be equal.

Sale, Purchase and GST Entries

Local sale of Rs. 1,00,000 plus 18% GST (9% CGST + 9% SGST) — Debit Sundry Debtor Rs. 1,18,000; Credit Sales Rs. 1,00,000, CGST Output Rs. 9,000, SGST Output Rs. 9,000. Interstate sale uses IGST Output instead. Local purchase of Rs. 50,000 plus 18% GST — Debit Purchases Rs. 50,000, CGST Input Rs. 4,500, SGST Input Rs. 4,500; Credit Sundry Creditor Rs. 59,000. At month-end, set off input against output — debit CGST Output, credit CGST Input — and pay the balance via challan: Debit GST Payable, credit Bank.

Salary, TDS and PF Entries

Gross salary Rs. 1,00,000, TDS Rs. 5,000, PF employee contribution Rs. 1,800, PF employer contribution Rs. 1,800, ESI ignored. Salary entry — Debit Salaries Rs. 1,00,000, Debit PF Contribution (Employer) Rs. 1,800; Credit Salary Payable Rs. 93,200, Credit TDS Payable Rs. 5,000, Credit PF Payable Rs. 3,600. Payment of salary — Debit Salary Payable Rs. 93,200; Credit Bank Rs. 93,200. Deposit of TDS — Debit TDS Payable Rs. 5,000; Credit Bank Rs. 5,000. The PF challan combines employee and employer shares and is paid by the 15th of the following month.

Depreciation and Year-End Entries

Depreciation on plant Rs. 50,000 — Debit Depreciation (expense) Rs. 50,000; Credit Accumulated Depreciation (or directly the Fixed Asset). Prepaid expense reversal — at year-end, debit Prepaid Insurance and credit Insurance for the unexpired portion. Outstanding expense — debit Rent and credit Rent Payable for the month of March if not yet paid. Accrued interest income — debit Accrued Interest and credit Interest Income. These adjusting entries are what convert raw cash transactions into accrual-basis books that match Section 145 requirements.

Auto-Generate Every Journal Entry with BillBabu

In BillBabu you never write a journal entry from scratch — when you raise a sales invoice the system auto-posts the four-line entry (Debtor, Sales, CGST, SGST); when you record a purchase the entry is auto-posted in reverse; salary processing generates the gross-net-statutory entry; depreciation posts on the monthly close. Every voucher carries a permanent narration and supporting document, so a future audit query can be answered in seconds. You spend your time on decisions, not on debits and credits.

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