Chart of Accounts for an Indian SMB (Excel)
Last updated: 27 June 2026
A chart of accounts (COA) is the master list of every account used in your books — the index of your entire accounting system. For a GST-registered Indian business, a well-structured COA with five account groups, GST-split accounts, and 4-digit codes gives you clean financials, accurate GSTR-3B reconciliation, and a smooth path to Tally if you migrate later. Download the free template — no sign-up required.
Key takeaways
- A COA groups every transaction into one of five types: Assets, Liabilities, Equity, Income, and Expenses.
- Use 4-digit codes (1000–5999), one thousand per group — this maps directly to Tally's group structure.
- GST-registered businesses need six separate GST accounts (Input and Output for CGST, SGST, IGST) to avoid manual splitting at GSTR-3B time.
- Split income accounts by GST rate: Nil, 5%, 18%, 40% — the 12% and 28% slabs were abolished on 22 September 2025.
- Keep Cash in Hand (1010) separate from Bank accounts; Section 40A(3) disallows cash payments above ₹10,000 per person per day, and mixing obscures this.
- TDS payable accounts should match deduction sections: 194C (contractors), 194J (professionals), 194I (rent).
What are the five account groups?
Fact box. The accounting equation — Assets = Liabilities + Equity — underpins all five groups. Income increases Equity via profit; Expenses reduce it. Assets and Expenses carry a Debit normal balance; Liabilities, Equity, and Income carry a Credit normal balance. Every transaction keeps both sides equal.
| # | Group | Normal Balance | What goes here |
|---|---|---|---|
| 1 | Assets | Debit | Cash, bank, debtors, inventory, fixed assets, advance tax, input GST credit |
| 2 | Liabilities | Credit | Creditors, loans, GST payable, TDS payable, salary payable |
| 3 | Equity | Credit | Share capital, retained earnings, proprietor drawings |
| 4 | Income | Credit | Sales by GST rate, other income, interest received |
| 5 | Expenses | Debit | Purchases, salaries, rent, power, freight, depreciation, interest expense |
What account numbering convention should an Indian SMB use?
The standard for Indian SMBs is a 4-digit code with each thousand reserved for one group:
| Range | Group |
|---|---|
| 1000–1999 | Assets |
| 2000–2999 | Liabilities |
| 3000–3999 | Equity |
| 4000–4999 | Income |
| 5000–5999 | Expenses |
Leave gaps between codes (use 1010, 1020, 1030 — not 1001, 1002, 1003) so you can insert accounts without renumbering.
What does a complete sample COA look like?
The table below covers the core accounts for a GST-registered Indian SMB in manufacturing, trading, or services. Adapt names to your business; keep the numbering convention.
| Code | Account Name | Group | Normal Balance | Notes |
|---|---|---|---|---|
| 1010 | Cash in Hand | Assets | Debit | Section 40A(3) compliance — keep separate from bank |
| 1020 | Bank — Current Account | Assets | Debit | One row per bank account |
| 1110 | Trade Debtors | Assets | Debit | Sub-ledger tracks individual customers |
| 1120 | Advance to Suppliers | Assets | Debit | Advances paid before goods received |
| 1210 | Closing Stock / Inventory | Assets | Debit | Value at cost or NRV, whichever lower |
| 1310 | Input CGST Credit | Assets | Debit | ITC claimable — CGST portion |
| 1320 | Input SGST Credit | Assets | Debit | ITC claimable — SGST portion |
| 1330 | Input IGST Credit | Assets | Debit | ITC claimable — IGST portion |
| 1410 | TDS Receivable | Assets | Debit | TDS deducted by customers on your invoices |
| 1420 | Advance Tax Paid | Assets | Debit | Quarterly income-tax payments |
| 1510 | Plant & Machinery (Gross) | Assets | Debit | At cost; depreciation in 5610 |
| 1520 | Furniture & Fixtures (Gross) | Assets | Debit | |
| 1530 | Computers & Equipment (Gross) | Assets | Debit | |
| 2010 | Trade Creditors | Liabilities | Credit | Sub-ledger tracks individual suppliers |
| 2020 | Salary Payable | Liabilities | Credit | Accrued salaries not yet paid |
| 2110 | Output CGST Payable | Liabilities | Credit | GST collected — CGST on sales |
| 2120 | Output SGST Payable | Liabilities | Credit | GST collected — SGST on sales |
| 2130 | Output IGST Payable | Liabilities | Credit | GST collected — IGST on inter-state sales |
| 2210 | TDS Payable — 194C | Liabilities | Credit | TDS on contractor payments |
| 2220 | TDS Payable — 194J | Liabilities | Credit | TDS on professional fees |
| 2230 | TDS Payable — 194I | Liabilities | Credit | TDS on rent, if applicable |
| 2310 | Term Loan — Bank | Liabilities | Credit | Separate current portion if material |
| 3010 | Proprietor Capital | Equity | Credit | Capital introduced |
| 3020 | Retained Earnings | Equity | Credit | Accumulated profit brought forward |
| 3030 | Proprietor Drawings | Equity | Debit | Contra-equity; reduces owner balance |
| 4010 | Sales — Nil GST | Income | Credit | Exempt or nil-rated goods/services |
| 4020 | Sales — 5% GST | Income | Credit | e.g., select food products |
| 4030 | Sales — 18% GST | Income | Credit | Most services and manufactured goods |
| 4040 | Sales — 40% GST | Income | Credit | Sin and luxury goods (e.g. tobacco, aerated drinks, high-end vehicles) |
| 4110 | Other Income | Income | Credit | Rent received, interest earned, misc |
| 5010 | Purchases — Raw Material | Expenses | Debit | |
| 5110 | Salaries & Wages | Expenses | Debit | Gross salary before PF/ESI deduction |
| 5120 | Employer PF Contribution | Expenses | Debit | 12% of basic — employer share |
| 5130 | Rent | Expenses | Debit | Office or factory rent |
| 5140 | Power & Utilities | Expenses | Debit | Electricity, water |
| 5150 | Freight & Cartage | Expenses | Debit | Inward and outward freight |
| 5160 | Professional Fees | Expenses | Debit | CA, legal, consultant fees |
| 5210 | Bank Charges & Interest | Expenses | Debit | Loan interest, processing fees |
| 5610 | Depreciation | Expenses | Debit | Match Companies Act / Income Tax rates |
Fact box. GST accounts — every GST-registered business needs separate accounts for CGST, SGST, and IGST on both input (purchases) and output (sales). A single "GST account" forces manual splitting each month before GSTR-3B and is a common reconciliation error. Keep six distinct accounts: 1310–1330 for input credit, 2110–2130 for output liability.
How do you set this up in Excel?
- Create a sheet named "COA" with columns: Code | Account Name | Group | Sub-Group | Normal Balance | Active (Y/N) | Notes.
- Freeze the top row — View → Freeze Panes → Freeze Top Row.
- Add data validation for the Group column — Data → Data Validation → List → enter:
Assets,Liabilities,Equity,Income,Expenses. This prevents typos that break pivot reports. - Format as a named table — Insert → Table, name it
tblCOAfor clean cross-sheet formulas. - Sort by Code — keep codes ascending; most reports and ledgers present in this order.
- Create a "Sub-Ledger Index" sheet for accounts like Trade Debtors (1110): list customers with sub-codes (1110-001, 1110-002). Main COA stays clean; detail lives in the sub-sheet.
- Protect the sheet once finalised — Review → Protect Sheet. New accounts should be added deliberately.
Is this COA compatible with Tally?
Tally uses the same five-group hierarchy internally. Your Excel codes map to Tally groups as follows:
| Excel Group | Tally Group |
|---|---|
| Assets — Current | Current Assets |
| Assets — Fixed | Fixed Assets |
| Liabilities — Current | Current Liabilities |
| Liabilities — Long-term | Loans (Liability) |
| Equity | Capital Account |
| Income | Sales Accounts / Indirect Income |
| Expenses | Purchase Accounts / Indirect Expenses |
When you migrate, export your COA as CSV and use Tally's import utility. Clean 4-digit codes and consistent group names make this a one-afternoon job. Check the import steps for your current Tally Prime release, as menu paths change between versions.
Frequently asked questions
How many accounts does an Indian SMB need? Most micro and small businesses run well with 30–50 accounts. Start with the sample table above and add sub-accounts only when a regulatory requirement or your CA specifically needs the detail.
Should I use separate income accounts for each GST rate? Yes, for any GST-registered business. The active GST slabs are Nil, 5%, 18%, and 40% — the 12% and 28% slabs were abolished on 22 September 2025. Separate accounts mean your GST working is done when you pull totals; no manual allocation required.
What is the difference between a sub-ledger and the main ledger? The main (general) ledger holds one balance per account code — Trade Debtors shows a single total. A sub-ledger breaks that total by individual customer. Both must agree at month-end. In Excel, the COA sheet is your general ledger index; a Customers pivot table is your sub-ledger.
Can I use this COA in Tally after migrating? Yes, with minor renaming. Tally's built-in groups have specific names (Sundry Debtors, Sundry Creditors) but the logical structure matches the five-group model. A consistent Excel COA maps cleanly — see the compatibility table above.
Why does Section 40A(3) matter for my chart of accounts? Section 40A(3) of the Income Tax Act disallows deductions for cash payments above ₹10,000 to a single person in a single day. A separate Cash in Hand account (1010) lets you filter cash payments instantly at year-end; a combined cash-and-bank account forces a slow manual review.
Sources and disclaimer
- GST slab changes: GST Council press note, 22 September 2025.
- MSME classification: Ministry of MSME notification, effective 1 April 2025 (Micro ≤ ₹10 cr turnover; Small ≤ ₹100 cr; Medium ≤ ₹500 cr).
- Section 40A(3): Income Tax Act, 1961, as amended.
This article is for general information only and does not constitute accounting, tax, or legal advice. Consult a qualified Chartered Accountant for guidance specific to your business.
How Ankeshan helps
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