Journal entries: capital, fixed assets and loans (11 situations)
Starting capital, drawings, buying and selling assets, depreciation, loans, EMIs and interest with TDS.
1. Owner brings in capital
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Bank | 5,00,000 |
| Cr | Capital Account | 5,00,000 |
2. Owner withdraws cash for personal use
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Drawings | 20,000 |
| Cr | Cash | 20,000 |
3. Owner takes goods for personal use
Cost ₹10,000. ITC of ₹1,800 was taken on these goods.
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Drawings | 11,800 |
| Cr | Purchases | 10,000 |
| Cr | Input GST (reversal) | 1,800 |
ITC is not allowed on goods used personally (s.17(5)(g)), so reverse it.
4. Buying machinery on credit
₹5,00,000 + 18% GST, within the state.
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Plant & Machinery | 5,00,000 |
| Dr | Input CGST | 45,000 |
| Dr | Input SGST | 45,000 |
| Cr | Supplier | 5,90,000 |
Important: If you claim ITC, do not also add the GST to the asset cost for depreciation. Cash payment above ₹10,000 for the asset is not added to its cost for depreciation.
5. Depreciation for the year
15% written-down value on ₹5,00,000.
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Depreciation | 75,000 |
| Cr | Plant & Machinery (or Accumulated Depreciation) | 75,000 |
Book depreciation (Companies Act or your policy) and tax depreciation (block rates) are different. Keep a fixed asset register.
6. Selling an old machine at a loss
Book value ₹2,00,000. Sold for ₹1,50,000 + 18% GST. ITC was taken when the machine was bought.
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Bank | 1,77,000 |
| Dr | Loss on Sale of Asset | 50,000 |
| Cr | Plant & Machinery | 2,00,000 |
| Cr | Output GST | 27,000 |
GST: Pay the higher of (a) GST on the sale value or (b) the ITC taken, reduced by 5 percentage points per quarter of use (s.18(6)).
7. Term loan received from a bank
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Bank | 10,00,000 |
| Cr | Term Loan — [Bank name] | 10,00,000 |
8. Paying an EMI
EMI ₹25,000: interest ₹8,000, principal ₹17,000.
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Term Loan | 17,000 |
| Dr | Interest on Loan | 8,000 |
| Cr | Bank | 25,000 |
Use the bank's repayment schedule to split each EMI. Only the interest is an expense.
9. Loan from a director or relative
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Bank | 3,00,000 |
| Cr | Unsecured Loan — [Name] | 3,00,000 |
Must be by bank: ₹20,000 or more cannot be taken or repaid in cash (s.185 and s.188, old 269SS and 269T). For a company, check that the lender is a director or relative so it doesn't count as a public deposit.
10. Interest received on FD with TDS
Interest ₹10,000, with 10% TDS deducted by the bank.
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Bank | 9,000 |
| Dr | TDS Receivable | 1,000 |
| Cr | Interest Income | 10,000 |
11. Interest paid on an unsecured loan, with TDS
Interest ₹60,000 to an individual lender. TDS 10% (old 194A).
| Dr/Cr | Ledger | ₹ |
|---|---|---|
| Dr | Interest on Loan | 60,000 |
| Cr | Lender | 54,000 |
| Cr | TDS Payable (interest) | 6,000 |
In Hisab Central
- Capital, loans and EMIs: Receipt (F6) and Payment (F5)
- Asset purchase: Purchase (F9), using a ledger under the Fixed Assets group
- Depreciation and drawings of goods: Journal (F7)
Sources
- CGST Act 2017 — sections 16, 17(5)(g), 18(6)
- Income-tax Act 2025 — sections 185, 188 (old 269SS/269T)
Last verified: 30 Sep 2026.