I had purchased the goods from one party & sold to another party for Rs 295000 but fire occured at time of sales and goods destroyed and insurance claim received of Rs 293000 what journal entry passed in books of accounts & how to give impact in GST
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I had purchased the goods from one party & sold to another party for Rs 295000 but fire occured at time of sales and goods destroyed and insurance claim received of Rs 293000 what journal entry passed in books of accounts & how to give impact in GST
Sorry to hear about the fire damage — let’s break this down clearly for accounting (journal entry) and GST implications.
🔷 Situation Recap:
✅ 1. Journal Entry in Books of Accounts
Let’s assume:
🔸 Entry when Goods are Destroyed:
If goods were destroyed before the sale was booked:
Loss by Fire A/c Dr. ₹2,95,000
To Inventory/Stock A/c ₹2,95,000
(Being goods destroyed by fire before invoicing)
🔸 Entry for Insurance Claim Received:
Bank A/c Dr. ₹2,93,000
Profit & Loss A/c (Loss) Dr. ₹2,000
To Loss by Fire A/c ₹2,95,000
(Being insurance claim received and loss accounted)
✅ 2. Impact in GST
➤ A. If Tax Invoice Was NOT Issued Yet:
➤ B. If Tax Invoice WAS Issued (i.e., Sale Accounted):
Then:
Example Journal Entry (If Sale Was Recorded):
Sales A/c Dr. ₹2,50,000
Output CGST A/c Dr. ₹22,500
Output SGST A/c Dr. ₹22,500
To Debtor’s A/c ₹2,95,000
(Being reversal of sale and output GST due to destruction)
Reverse Inventory:
Loss by Fire A/c Dr. ₹2,95,000
To Inventory A/c ₹2,95,000
Insurance Claim:
Bank A/c Dr. ₹2,93,000
Profit & Loss A/c (Loss) Dr. ₹2,000
To Loss by Fire A/c ₹2,95,000
✅ GST Reporting Summary
Case |
GST Impact |
No invoice issued |
No GST applicable |
Invoice issued |
Reverse sale and GST via credit note in GSTR-1 and reduce liability in GSTR-3B |
💡 Extra Tip:
You cannot claim ITC on goods destroyed by fire, as per Section 17(5)(h) of CGST Act.
If ITC was already claimed on purchase of these goods, you need to reverse the ITC.
Journal Entry to reverse ITC (if already claimed):
Input CGST A/c Dr. ₹X
Input SGST A/c Dr. ₹X
To ITC Reversal A/c ₹2X
(Being ITC reversed on goods destroyed)
Purposeful reply with illustration.Quite effective.