How is 'GST Payable' categorized in accounting?

'GST Payable' is categorized as a current liability in accounting because it represents an obligation that a business needs to settle in the short term, typically within a year. When a company sells goods or services, it collects Goods and Services Tax (GST) from its customers. This tax collected does not belong to the business; instead, it is owed to the tax authorities until it is paid.

Since GST Payable needs to be paid in the near future, it is recorded as a liability on the balance sheet. Current liabilities are obligations that the company expects to pay off within a year or within its operating cycle, whichever is longer. The distinction of placing GST Payable under current liabilities reflects the necessity for businesses to manage their cash flow effectively while fulfilling their tax obligations.

This classification helps stakeholders assess the company's short-term financial health and ability to meet its obligations, further ensuring compliance with tax regulations.