TaxTMI 
TaxTMI 
TaxTMI 
Regarding loss on sale due to fire
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....egarding loss on sale due to fire<br> Query (Issue) Started By: - YASH JAIN Dated:- 17-4-2025 Last Reply Date:- 17-4-2025 Income Tax<br>Got 2 Replies<br>Income Tax<br>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 gi....
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....ve impact in GST Reply By YAGAY andSUN: The Reply: Sorry to hear about the fire damage - let's break this down clearly for accounting (journal entry) and GST implications. 🔷 Situation Recap: * You purchased goods. * You were in the process of selling them for Rs.2,95,000. * Before the sale was completed, fire destroyed the goods. * Insurance claim of Rs.2,93,000 was received. &....
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....#9989; 1. Journal Entry in Books of Accounts Let's assume: * Goods were recorded in inventory. * You had not yet issued a tax invoice (since sale was not completed). * There may or may not be a partial or full invoice issued (we'll consider both cases below). 🔸 Entry when Goods are Destroyed: If goods were destroyed before the sale was booked: Loss by Fire A/c ....
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.... Dr. Rs.2,95,000 To Inventory/Stock A/c Rs.2,95,000 (Being goods destroyed by fire before invoicing) 🔸 Entry for Insurance Claim Received: Bank A/c Dr. &nb....
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....sp; Rs.2,93,000 Profit & Loss A/c (Loss) Dr. Rs.2,000 To Loss by Fire A/c Rs.2,95,000 (Being insurance claim received and loss accounted) ✅ 2. Impact in GST ➤ A. If Tax Invoice Was NOT Issued Yet: * Then no GST liability arises. * Since....
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.... no supply (as per Section 7 of CGST Act) has occurred, GST is not applicable. ➤ B. If Tax Invoice WAS Issued (i.e., Sale Accounted): Then: * GST was considered payable, but supply never happened. * You need to reverse the GST liability using: * Credit Note (if sale was booked), or * File in GSTR-1 and GSTR-3B appropriately. Example Journal Entry (If Sale Was Recorded): Sales A/....
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....c Dr. Rs.2,50,000 Output CGST A/c Dr. Rs.22,500 Output SGST A/c Dr. Rs.22,500 To Debtor's A/c &n....
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....bsp; Rs.2,95,000 (Being reversal of sale and output GST due to destruction) Reverse Inventory: Loss by Fire A/c Dr. Rs.2,95,000 To Inventory A/c Rs.2,95,000 Insurance ....
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....Claim: Bank A/c Dr. Rs.2,93,000 Profit & Loss A/c (Loss) Dr. Rs.2,000 To Loss by Fire A/c Rs.2,95,000 ✅ GST Reporting Summary Case GST Impact No invoice issued No GST applicable Invoice i....
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....ssued 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 &nbs....
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....p; Dr. Rs.X Input SGST A/c Dr. Rs.X To ITC Reversal A/c Rs.2X (Being ITC reversed on goods destroyed) Reply By Sadanand Bulbule: The Reply: Purposeful reply with illustration.Quite effective.<br> Discussion Forum - Knowledge Sharing ....