Accounting Under Goods And Services Tax

Last Updated On: May 30, 2020, 9:33 p.m.
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Accounting Under GST

It is very important to maintain books of Accounts and record each and every transaction in the course of Business. 

It allows to take control of the business operation. We can analyze the business performance by maintaining proper books of accounts.

Maintaining books of accounts under GST is not a new Compliance, this concept has come from the former of Central Excise, Sales Tax Laws, Service Tax Laws. 

The books of accounts must be recorded in the place of business. If more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business.

Section 2(85) “place of business” includes–

  • a place from where the business is ordinarily carried on and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies, or receives goods or services or both.
  • a place where a taxable person maintains his books of account.
  • a place where a taxable person is engaged in business through an agent, by whatever name called.

Books of Accounts maintained under GST:

  • Section 35 of the CGST Act 2017, deals with the maintenance of books of accounts by every Registered person at his principal place of business i.e. the place where the business is taking place and this place is mentioned in the Certificate of registration of registered person.
  • In case of Transports, the warehouse need not maintain books of accounts and it does not change their decision if they are not registered under GST. However, they should maintain books of accounts related to their Consigner, Consignee, and other related information.
  • In Case of supply of Cash crops where the auctioneer claims ITC in respect of the supply made to him by the principal before the auction of such goods and the said goods are supplied only through an auction, in this case, both auctioneer and the principal are required to maintain books of accounts relating to the additional place.

Manner of maintaining books of accounts:

  • Records can also be maintained in electronic form. Such records have to be authenticated digitally.
  • Back-up of records is to be maintained and preserved in a proper electric form. It should be maintained in such a manner that, in the event of destruction of such records due to accidents or natural causes, the information can be restored within a reasonable period of time.
  • The registered person should provide the details of such files, passwords of such files, and explanations for codes used where it is necessary.
  •  As per Rule 56(8) of the CGST Rules, 2017, any entry in the register, accounts, and documents shall not be erased, effaced, or overwritten.

Maintenance of Additional records as per Rule 56 of CGST Rules, 2017

  •  Goods or services imported or exported
  •  Supplies relating to the payment of tax on reverse charge along with relevant documents including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers, and e-way bills should be maintained.
  • Accounts of stock in respect to goods received and supplied, containing details of opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and balance of stock including raw materials, finished goods, scrap, and wastage Composition dealer need no maintain these details.
  • Tax payable on a reverse charge basis.
  • Tax payable, tax collected and paid input tax, input tax credit claimed, together with a register of tax invoice, credit notes, debit notes, delivery challan issued or received during any tax period (Not applicable to composition dealer)
  • Name and complete addresses of suppliers from whom he has received the goods or services should be mentioned.
  • Name and complete addresses of the persons to whom he has supplied the goods or services.
  • Complete addresses of the premises where the goods are stored by him, including goods stored during transit along with the particulars of the stock stored therein.

List of Documents to be maintained by a Registered person:

According to Section 35(1) of the CGST Act, 2017 read with the CGST Rules, 2017, every registered person should record and maintain the following accounts on a true and correct basis.

  • Production or manufacture of goods
  • Inward or outward supply of goods or services
  • The stock of goods (Stock register)
  • Input tax credit availed (Electronic credit ledger)
  • Output tax payable and paid
  • Such other particulars as may be prescribed.

Consequences of not maintaining books of Accounts under GST:

According to section 35(1), if the registered person fails to maintain books of accounts of goods or services supplied, the proper officer shall evaluate the amount of tax payable on the goods and/or services that are not recorded in the books.

In term of provision of Section 122 of CGST Act, where a registered person

  • falsifies 
  • substitutes financial records 
  • Publishing fake accounts and/or documents 
  • Publishing any false information or return with an intention of evasion tax.
  • Such a person shall be punished with a penalty that shall be higher of the amount of tax evaded or Rs. 10,000 whichever is higher

Section 122(3) of the CGST Act provides for levy of penalty extending to 25,000/- for any person who aids or abets any of the aforesaid offenses

Section 132 of CGST Act also provide where a registered person commits

  • falsification 
  • substitutes financial records 
  • pro0duces fake accounts and/or documents 
  • furnishes any false information or return with an intention to evade payment of tax due under this Act
  • Such person shall be punished with 6-month imprisonment or Fine or both

PERIOD OF RETENTION OF ACCOUNTS:

  • Every registered person is required to mandatorily retain the books of accounts and other records until the expiry of (6 years) from the due date for filing of Annual Return for the year.
  • Where a registered party is a party to appeal or revision or any other proceeding before the Appellate Authority, or investigation for an offense under this act, in such case, he shall retain the books of accounts and other records for a period of one year after final disposal of such appeal or revision or proceedings or investigation, or until the expiry of 72 months from the due date of filing of Annual Return for the year pertaining to such accounts and records, whichever is later.
  • Where any disputes are involved, then records must be maintained until the final disposal of those matters.
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