The gst is a 7% personal consumption tax that is collected on most goods and services provided in canada. There are gst exemptions that does not require to be taxed. Pst is a single-stage tax collected from final consumers on goods and services. Gst and pst are excluded from the sales account as it is only collected to be remitted. The general entry would be: cash/a. r debited, sales credited, gst/pst payable. If merchandise is returned, the general entry would be: sales returns and allowances debited, gst/pst payable debited, and cash/a. r credited. Businesses pay gst on their purchases, but are able to recover the gst. Consequently, when merchandise is purchased, the gst paid by a business is not part of the inventory cost. The gst paid on purchases is debited to an account called gst recoverable and is called an input tax credit. This input tax credit is used to offset against the gst payable.