Here is our second part of the series seeking to give you some insights on the various records to be kept under the GST regime.
GST has subsumed a plethora of state and central indirect tax levies unifying India’s complex taxation structure. Under the former tax regime, traders were required to keep different books for filing return for various taxes like VAT, Excise etc. who will now be required to maintain records under the singular tax regime. It is a sigh of relief for the composition dealers as they are not required to maintain detailed records as in the case of a normal taxpayer.
Section 35 of the GST Act explains the record-keeping requirements. In addition, in April 2017 the central government has released draft rules for GST accounts and records (draft record rules), which listed additional GST accounting and record-keeping requirements.
Each registered taxpayer is required to maintain a true and correct account of the following at each place of its business:
- The details of manufacture or production of goods.
- The details of the inward and outward supply of services or goods or both.
- The stock of goods.
- The input tax credit availed.
- The output tax payable and paid.
- And any other particulars as may be agreed.
In addition, the rules also provide that the registered person shall keep and maintain records
- A separate account of advances received and paid, along with any adjustments
- A true and correct account of:
- Goods or services imported or exported
- Supplies attracting payment of tax on reverse charge
- Other relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, and refund vouchers.
- The details of suppliers with information including names and complete addresses of suppliers from whom he has received the goods or services chargeable to tax under GST
- The details of customers with information including names and complete addresses of the persons to whom he has supplied goods or services, where required under GST
- Complete address of the premises where goods are stored by the taxpayer, including goods stored during transit along with the particulars of the stock stored therein.
Apart from the above requirements, manufacturers, agents, brokers, work contractor, owner or operator of a go down or warehouse and a transporter have to adhere to some additional record keeping rules.
Records and accounts under the GST can be maintained in both electronic or the book format. Each of the volumes of books of account with GST records maintained manually should be serially numbered. While maintaining GST accounts manually, if any entry in any of the registers or accounts or documents is erased, effaced or overwritten, then it should be scored out under attestation and thereafter correct entry should be recorded.
If accounts are maintained in electronic form, the following points must be borne in mind:
- The records should be authenticated by a digital signature.
- A log of every entry edited or deleted shall be maintained.
- Backup of records should be available such that even if they are destroyed due to accidents or natural causes, they can be restored within a reasonable period of time.
- The records or documents should be produced on demand, authenticated by the person, in hard copy or in an electronically readable format. The person should also provide on demand, the details of the files, passwords of the files and explanation for codes used (where necessary) for access to the files, along with a sample copy in print form of the information stored in the files.
Period for preservation of accounts: All accounts maintained together with all invoices, bills of
supply, credit and debit notes and delivery challans relating to stocks, deliveries, inward supply and outward supply shall be preserved for seventy-two months (six years) from the due date of
furnishing of annual return for the year pertaining to such accounts and records and shall be kept at every related place of business mentioned in the certificate of registration.
To put it briefly, the game changer indirect tax regime calls for detailed records to be kept not only by suppliers of goods or services but also by intermediaries such as warehouse owners, transporters, and agents. In addition, they also have to track stocks given as free samples or gifts thus bringing in more transparency.
Other than adhering to the legal requirements record keeping can help you to:
- Keep a track of your business’ health and make sound business decisions
- Prepare your tax return more easily
- Manage your cash flow
- Demonstrate your financial position to banks or other lenders
Initially, the businesses may find it difficult to adjust to the new tax regime, more so for the smaller players, but it can be reasonably expected that tax leakages within the GST chain will be effectively plugged in and it will contribute to better tax compliance mechanism.
Do share your views on the same in the comments below!