Ankeshan

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?

  1. Create a sheet named "COA" with columns: Code | Account Name | Group | Sub-Group | Normal Balance | Active (Y/N) | Notes.
  2. Freeze the top row — View → Freeze Panes → Freeze Top Row.
  3. Add data validation for the Group column — Data → Data Validation → List → enter: Assets,Liabilities,Equity,Income,Expenses. This prevents typos that break pivot reports.
  4. Format as a named table — Insert → Table, name it tblCOA for clean cross-sheet formulas.
  5. Sort by Code — keep codes ascending; most reports and ledgers present in this order.
  6. 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.
  7. 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

Ankeshan is building an Excel-based accounting system for Indian SMBs — double-entry bookkeeping, GST working, TDS tracking, and financial reports, all inside a workbook your team already knows. Join the early-access list at ankeshan.com/waitlist — no commitment required.


Related articles