Industry
Accounting for traders runs on party ledgers and credit
A trader's profit is often thin and most of the money is out with customers or tied up in stock. So the books must answer three things at any moment: who owes what, what you owe, and what is on the shelf.
The life of one credit deal
Each step leaves a record. Where businesses go wrong is usually a step recorded late, or not at all. This is an illustration.
You buy on credit
Supplier bill, transport, and goods checked in. Your payable and stock both rise.
The bill reaches GST data
Check it in your supplier view and GSTR-2B before you rely on the credit.
You sell on credit
Tax invoice and, where applicable, an e-way bill. Your receivable rises and stock falls.
The customer pays part
Match the payment to specific bills, not just to the account.
Goods come back, or a discount is given
Issue the right credit note. An informal adjustment breaks the ledger and the return.
You pay the supplier
On time, partly because of the credit rule explained below.
The 180-day rule traders should know
Under section 16(2) of the CGST Act and rule 37 of the CGST Rules, if you do not pay a supplier the value and tax within 180 days of the invoice date, you must reverse the input tax credit on that bill, in proportion to the amount still unpaid, with interest under section 50. The reversal goes in the GSTR-3B for the period after the 180 days end. You can claim the credit again once you pay.
So long credit from your supplier has a cost beyond the bill. Ask Deepak Mittal for a monthly list of unpaid bills approaching 180 days, and raise unusual cases, such as disputed bills, with him.
Reports worth asking for each month
- Receivables by age: 0 to 30, 31 to 60, 61 to 90 and over 90 days
- Payables by age, with the 180-day items flagged
- Party ledger confirmations for large balances
- Stock by item, or at least by category, with slow movers
- Gross margin by month, and by product line if you can
- GST credit in your books compared with GSTR-2B
Where traders' books usually go wrong
- On-account receipts. Money is recorded against the party but not against bills, so nobody knows which bill is unpaid.
- Balances never confirmed. Your ledger and the customer's differ, and the gap appears when it is too late to resolve.
- Stock known only from memory. Without records, profit is a guess. Discuss how often to count and how to value it.
- Cash discounts and "kachha" adjustments. Unrecorded deals make the books and GST returns unreliable, and can create serious tax exposure.
- Same ledger under several names. Duplicate party names split balances. Clean your party list.
- Cash limits ignored. Section 186 of the Income-tax Act, 2025 bars receiving ₹2 lakh or more from one person in a day, for one transaction or for one event, other than by account payee cheque, bank draft or electronic bank transfer. Other cash limits apply to expenses and loans, so check them with Deepak Mittal.
Working capital in one sentence
Work out how many days of sales are stuck in stock plus customer dues, less the days of credit your suppliers give you. If this number grows while sales stay flat, you are funding other people's businesses. Good monthly reports let you see it early.
Questions to ask Deepak Mittal about trading accounts
- How do you match receipts to bills? Show me a sample ledger.
- How will you track bills nearing 180 days?
- How do you handle returns, rate differences and transport charges?
- How often will you reconcile with GSTR-2B?
- Are you comfortable with my invoice volume in the busy season?
Trader or retailer?
If you sell mostly to walk-in consumers, see accounting for retail shops, where daily cash and UPI matter more than party credit. For market context, see Delhi's wholesale and trading markets.
Sources checked, November 2026
- CGST Rules, rule 37 (opens in a new tab) on CBIC's tax information portal (read at source, 10 November 2026)
- Income-tax Act, 2025, Gazette copy (opens in a new tab), section 186 (read at source)
Party ledgers, stock and GST credit to sort out?
Tell us what you trade, how many invoices a month, and what software you use.
