diff --git a/vault/identity_store_entities.go b/vault/identity_store_entities.go
index f326edc8faea..f3b3caf87cf8 100644
--- a/vault/identity_store_entities.go
+++ b/vault/identity_store_entities.go
@@ -446,6 +446,26 @@ func (i *IdentityStore) handleEntityReadCommon(entity *identity.Entity) (*logica
 	// formats
 	respData["aliases"] = aliasesToReturn
 
+	// Fetch the groups this entity belongs to and return their identifiers
+	groups, inheritedGroups, err := i.groupsByEntityID(entity.ID)
+	if err != nil {
+		return nil, err
+	}
+
+	groupIDs := make([]string, len(groups))
+	for i, group := range groups {
+		groupIDs[i] = group.ID
+	}
+	respData["direct_group_ids"] = groupIDs
+
+	inheritedGroupIDs := make([]string, len(inheritedGroups))
+	for i, group := range inheritedGroups {
+		inheritedGroupIDs[i] = group.ID
+	}
+	respData["inherited_group_ids"] = inheritedGroupIDs
+
+	respData["group_ids"] = append(groupIDs, inheritedGroupIDs...)
+
 	return &logical.Response{
 		Data: respData,
 	}, nil
diff --git a/vault/identity_store_entities_test.go b/vault/identity_store_entities_test.go
index 10225fd444aa..23beabc99c71 100644
--- a/vault/identity_store_entities_test.go
+++ b/vault/identity_store_entities_test.go
@@ -12,6 +12,86 @@ import (
 	"github.com/hashicorp/vault/logical"
 )
 
+func TestIdentityStore_EntityReadGroupIDs(t *testing.T) {
+	var err error
+	var resp *logical.Response
+
+	i, _, _ := testIdentityStoreWithGithubAuth(t)
+
+	entityReq := &logical.Request{
+		Path:      "entity",
+		Operation: logical.UpdateOperation,
+	}
+
+	resp, err = i.HandleRequest(entityReq)
+	if err != nil || (resp != nil && resp.IsError()) {
+		t.Fatalf("bad: resp: %#v\nerr: %v", resp, err)
+	}
+
+	entityID := resp.Data["id"].(string)
+
+	groupReq := &logical.Request{
+		Path:      "group",
+		Operation: logical.UpdateOperation,
+		Data: map[string]interface{}{
+			"member_entity_ids": []string{
+				entityID,
+			},
+		},
+	}
+
+	resp, err = i.HandleRequest(groupReq)
+	if err != nil || (resp != nil && resp.IsError()) {
+		t.Fatalf("bad: resp: %#v\nerr: %v", resp, err)
+	}
+
+	groupID := resp.Data["id"].(string)
+
+	// Create another group with the above created group as its subgroup
+
+	groupReq.Data = map[string]interface{}{
+		"member_group_ids": []string{groupID},
+	}
+	resp, err = i.HandleRequest(groupReq)
+	if err != nil || (resp != nil && resp.IsError()) {
+		t.Fatalf("bad: resp: %#v\nerr: %v", resp, err)
+	}
+
+	inheritedGroupID := resp.Data["id"].(string)
+
+	lookupReq := &logical.Request{
+		Path:      "lookup/entity",
+		Operation: logical.UpdateOperation,
+		Data: map[string]interface{}{
+			"type": "id",
+			"id":   entityID,
+		},
+	}
+
+	resp, err = i.HandleRequest(lookupReq)
+	if err != nil || (resp != nil && resp.IsError()) {
+		t.Fatalf("bad: resp: %#v\nerr: %v", resp, err)
+	}
+
+	expected := []string{groupID, inheritedGroupID}
+	actual := resp.Data["group_ids"].([]string)
+	if !reflect.DeepEqual(expected, actual) {
+		t.Fatalf("bad: group_ids; expected: %#v\nactual: %#v\n", expected, actual)
+	}
+
+	expected = []string{groupID}
+	actual = resp.Data["direct_group_ids"].([]string)
+	if !reflect.DeepEqual(expected, actual) {
+		t.Fatalf("bad: direct_group_ids; expected: %#v\nactual: %#v\n", expected, actual)
+	}
+
+	expected = []string{inheritedGroupID}
+	actual = resp.Data["inherited_group_ids"].([]string)
+	if !reflect.DeepEqual(expected, actual) {
+		t.Fatalf("bad: inherited_group_ids; expected: %#v\nactual: %#v\n", expected, actual)
+	}
+}
+
 func TestIdentityStore_EntityCreateUpdate(t *testing.T) {
 	var err error
 	var resp *logical.Response
diff --git a/vault/identity_store_groups_test.go b/vault/identity_store_groups_test.go
index a7a7d166793f..45287c2f3ca8 100644
--- a/vault/identity_store_groups_test.go
+++ b/vault/identity_store_groups_test.go
@@ -546,11 +546,11 @@ func TestIdentityStore_GroupMultiCase(t *testing.T) {
 
 /*
 Test groups hierarchy:
-               eng
-       |                |
-     vault             ops
-     |   |            |   |
-   kube identity  build  deploy
+                ------- eng(entityID3) -------
+                |                            |
+         ----- vault -----        -- ops(entityID2) --
+         |               |        |                  |
+   kube(entityID1)    identity    build            deploy
 */
 func TestIdentityStore_GroupHierarchyCases(t *testing.T) {
 	var resp *logical.Response
@@ -808,27 +808,36 @@ func TestIdentityStore_GroupHierarchyCases(t *testing.T) {
 		t.Fatalf("bad: policies; expected: 'engpolicy'\nactual:%#v", policies)
 	}
 
-	groups, err := is.transitiveGroupsByEntityID(entityID1)
+	groups, inheritedGroups, err := is.groupsByEntityID(entityID1)
 	if err != nil {
 		t.Fatal(err)
 	}
-	if len(groups) != 3 {
-		t.Fatalf("bad: length of groups; expected: 3, actual: %d", len(groups))
+	if len(groups) != 1 {
+		t.Fatalf("bad: length of groups; expected: 1, actual: %d", len(groups))
+	}
+	if len(inheritedGroups) != 2 {
+		t.Fatalf("bad: length of inheritedGroups; expected: 2, actual: %d", len(inheritedGroups))
 	}
 
-	groups, err = is.transitiveGroupsByEntityID(entityID2)
+	groups, inheritedGroups, err = is.groupsByEntityID(entityID2)
 	if err != nil {
 		t.Fatal(err)
 	}
-	if len(groups) != 2 {
-		t.Fatalf("bad: length of groups; expected: 2, actual: %d", len(groups))
+	if len(groups) != 1 {
+		t.Fatalf("bad: length of groups; expected: 1, actual: %d", len(groups))
+	}
+	if len(inheritedGroups) != 1 {
+		t.Fatalf("bad: length of inheritedGroups; expected: 1, actual: %d", len(inheritedGroups))
 	}
 
-	groups, err = is.transitiveGroupsByEntityID(entityID3)
+	groups, inheritedGroups, err = is.groupsByEntityID(entityID3)
 	if err != nil {
 		t.Fatal(err)
 	}
 	if len(groups) != 1 {
 		t.Fatalf("bad: length of groups; expected: 1, actual: %d", len(groups))
 	}
+	if len(inheritedGroups) != 0 {
+		t.Fatalf("bad: length of inheritedGroups; expected: 0, actual: %d", len(inheritedGroups))
+	}
 }
diff --git a/vault/identity_store_util.go b/vault/identity_store_util.go
index 4fb99e8be89d..381db6a68809 100644
--- a/vault/identity_store_util.go
+++ b/vault/identity_store_util.go
@@ -1970,14 +1970,14 @@ func (i *IdentityStore) groupPoliciesByEntityID(entityID string) ([]string, erro
 	return strutil.RemoveDuplicates(policies, false), nil
 }
 
-func (i *IdentityStore) transitiveGroupsByEntityID(entityID string) ([]*identity.Group, error) {
+func (i *IdentityStore) groupsByEntityID(entityID string) ([]*identity.Group, []*identity.Group, error) {
 	if entityID == "" {
-		return nil, fmt.Errorf("empty entity ID")
+		return nil, nil, fmt.Errorf("empty entity ID")
 	}
 
-	groups, err := i.MemDBGroupsByMemberEntityID(entityID, false, false)
+	groups, err := i.MemDBGroupsByMemberEntityID(entityID, true, false)
 	if err != nil {
-		return nil, err
+		return nil, nil, err
 	}
 
 	visited := make(map[string]bool)
@@ -1985,7 +1985,7 @@ func (i *IdentityStore) transitiveGroupsByEntityID(entityID string) ([]*identity
 	for _, group := range groups {
 		gGroups, err := i.collectGroupsReverseDFS(group, visited, nil)
 		if err != nil {
-			return nil, err
+			return nil, nil, err
 		}
 		tGroups = append(tGroups, gGroups...)
 	}
@@ -2001,7 +2001,15 @@ func (i *IdentityStore) transitiveGroupsByEntityID(entityID string) ([]*identity
 		tGroups = append(tGroups, group)
 	}
 
-	return tGroups, nil
+	diff := diffGroups(groups, tGroups)
+
+	// For sanity
+	// There should not be any group that gets deleted
+	if len(diff.Deleted) != 0 {
+		return nil, nil, fmt.Errorf("failed to diff group memberships")
+	}
+
+	return diff.Unmodified, diff.New, nil
 }
 
 func (i *IdentityStore) collectGroupsReverseDFS(group *identity.Group, visited map[string]bool, groups []*identity.Group) ([]*identity.Group, error) {