Section 59 of the CGST Act, 2017 provides that every registered person under GST is required to self-assess the tax liability under the Act.
Further, post the self assessment, such a registered taxpayer is required to file tax returns for the specified tax period.
Then, the GST department undertakes the compliance verification of the particular taxpayer via carefully examining the returns, conducting an audit or investigation.
This means that the compliance verification is undertaken by checking the documents filed by the taxpayer and not via physical controls.
Thus, such a verification process requires some accountability on the part of the taxpayer in the form of maintaining certain records and books of accounts.
This article talks in detail about the accounts and records under GST, persons required to maintain such accounts and records and the list of records to be maintained under GST.[/vc_column_text]
Accounts and Records Under GST
As per Section 35(1) of the CGST Act, 2017, each registered taxpayer under the GST regime is required to maintain a true and correct accounts and records.
Further, such accounts and records need to be maintained at the principal place of business of the registered taxpayer as mentioned in the Certificate of Registration.
Rules With Regards To Maintaining Accounts and Records
(i) Registered Person Has More Than One Place Of Business
In cases where the taxpayer has more than one place of business specified in the Certificate of Registration, each place must maintain its own accounts and records.
Also, such accounts can be maintained in electronic form in a specified manner.
(ii) Way To Record Wrong Entries
Further, the registered taxpayers must ensure that transactions entered in registers or books of accounts shall not be erased or overwritten.
Also, all the wrong entries should be replaced with the correct entries. And in case the documents are maintained electronically, log of every deleted or edited entry must be kept.
(iii) Records Maintained at a Place Other Than That Mentioned in Registration Certificate
In addition to this, there can be circumstances where the books of accounts of a registered taxpayer are found at a premises other than that specified in the Certificate of Registration.
In such a scenario, the books of accounts shall be taken as the ones maintained by the registered person to whom such a premise belongs.
(iv) Records Can Be Maintained in Electronic Format
Books of accounts under GST can be kept in electronic form. Also, such records shall be validated via digital signatures.
Furthermore, where records are kept electronically, backup of such records shall be preserved in a way that such records can be retrieved within a reasonable time period.
Also, where such records are demanded by the law, the registered taxpayer should provide all the details with respect to such documents such as passwords etc. This is done so that such information can be accessed.
(v) Producing Books of Accounts When Demanded By Law
The registered taxpayers are required to show books of accounts in case law demands them to do so.
Who Needs To Maintain?
Section 35 of the CGST Act provides that regardless of whether the following persons are registered or not, each of them are liable to maintain accounts and records under GST.
- Operator of the warehouse or godown
The owner or operator of the warehouse or godown are required to maintain books of accounts for the period for which goods are stored in the warehouse.
Such accounts also include details with regards to dispatch, movement, receipt and disposal of the goods stored.
Further, the owner or operator of the warehouse must store these goods in such a way that these can be recognized item wise and owner wise.
Also, the records would help in any physical verification or investigation undertaken on demand.
Likewise, transporters need to maintain accounts in respect of goods:
- Delivered and
- Stored in Transit by the transporter
He also needs to maintain a record of the GSTIN of the registered consignor and consignee for each of his branches.
Rules Regarding Accounts and Records To Be Maintained by the Owners, Operators and Transporters
(i) Application for Enrollment Number By Unregistered Persons
All the persons who are required to maintain accounts and records under GST and are not already registered under the Act must provide information with regards to their business.
This is done electronically via the GST common portal in Form GST ENR-01. Once the submitted details are verified, a unique enrollment number is issued to such persons.
(ii) Application of Unique Common Enrollment Number By a Transporter Having Branches in More Than One State
In case of a transporter, who is registered in more than one state or UT with the same PAN, he must apply for the unique Common Enrollment Number by providing information in Form GST ENR-02.
This is done by using any one of the GST numbers. Further, once the submitted details are verified, Unique Common Enrollment Number is issued to the transporter.
What Records To Maintain?
Following are the records that need to be maintained by the taxpayers:
Accounts of Stock
The registered taxpayers other than the ones registered under the Composition Scheme must keep accounts of stock with regards to goods received as well as supplied by such taxpayer.
Further, these stock records would include details such as:
- opening balance of stock
- Goods received
- The goods supplied
- Goods lost, stolen or damaged
- The, Goods written off or given in the form of gift or free samples
- Stock balance including raw materials, finished goods, wastage etc.
Advances Received and Paid
The taxpayers need to keep separate record of advances received, advances paid and all the relevant adjustments made in this respect.
Tax Liability and ITC
Details of Suppliers, Customers and Warehouse
The registered taxpayers need to keep records of:
- Names and addresses of the vendors from whom goods or services are received
- Addresses and names of customers to whom goods or services are supplied
- Address of the premises where goods are stored including the goods stored during transit together with the information of stock stored in such a premise
Details of Goods Produced
Registered taxpayers producing goods must maintain accounts in respect of such a production month by month.
It should include information in respect of raw materials or services utilized to produce goods and other details such as waste and other by products.
Records of Services Supplied
Registered taxpayers providing services must maintain accounts in respect of:
- Goods used to provide such services
- Input services used
- Services rendered
Accounts in Respect of Works Contract
Registered taxpayers implementing works contract must keep accounts of such works contract. This must include:
- Names and addresses of persons on whose behalf such a contract is being implemented
- Amount, quantity as well as other details of goods or services received to implement such a contract
- Amount, quantity and other details of goods or services used in implementing such a contract
- Information of the payment received in respect of such a contract
- Names and addresses of the vendors from whom goods or services were received by such a taxpayer
Period For Preservation
All the accounts and records kept along with the invoices, bill of supply, credit or debit notes, delivery challans in respect of stocks, deliveries, inward and outward supply must be preserved for six years.
This period is counted from the due date of filing annual return for the accounting period to which such accounts and records relate.
Further, these shall be maintained at every related place of business so mentioned in the Registration Certificate.
However, the registered taxpayer who is part of any proceedings or investigation in respect of an offence must retain accounts in respect of such an investigation:
Either for a period of one year after the completion of such proceedings or investigation
Or for a period of six years whichever is later