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All you need to know about Accounts and Records Under GST

Ashish M. Shaji

| Updated: Feb 20, 2021 | Category: GST

Accounts and Records Under GST

Accounts and records should be maintained under GST. Every registered person under GST should keep and maintain all specified accounts and records at his principal place of business. In this article, we shall discuss about accounts and records under GST.

Accounts and other records

Who is required to maintain Accounts and other records under GST?

Section 35 of the CGST Act 2017[1] casts the responsibility on the following to maintain specified records:

Maintain Accounts and other records under GST
  • The owner;
  • The Operator of the warehouse or the godown or any other place used for storage of goods;
  • Every transporter.

Audit of accounts under GST

 Every registered person should get his accounts audited, whose turnover during a financial year exceeds the prescribed limit of 2 crore, by a chartered accountant or a cost accountant.

What books of accounts or records are to be maintained under GST?

Every registered person is required to maintain records of:

  • Production or manufacture of goods;
  • Inward supply of goods or services and outward supply of goods or services or both (Purchase and Sales register);
  • Stock of goods (Inventory Register);
  • Input tax credit availed (Electronic Credit Ledger);
  • Output tax that is payable and paid and (electronic Liability and electronic cash ledger);
  • Other particulars as prescribed;
  • Records of goods/services imported or exported or;
  • Record of supplies attracting payment of tax on reverse charge with relevant documents, including invoices, bills of supply, delivery challans, debit and credit notes, receipt vouchers, payment vouchers, refund vouchers, and e-way bills.

RECORDS UNDER GST

 

INFORMATION REQUIRED

 

BY WHOM?

 

Register of Goods Produced

 

 

Account should have details regarding goods manufactured in a factory or a production house

Assessee carrying out manufacturing activity

 

 

 

Purchase register

 

 

 

 

Purchases made in a tax period for manufacturing of goods or services

 

All Assessee

 

 

 

 

Sales Register

 

 

 

 

Register should be maintained containing accounts of sales made in a tax period

 

All Assessee

 

 

 

 

Stock Register

 

 

 

The register should contain the correct stock of inventory available

 

All Assessee

 

 

 

Input Tax Credit Availed

 

 

 

 

 

Register should be maintained containing details of Input Tax Credit Availed for a given tax period

 

 

All Assessee

 

 

 

 

 

 

Output tax liability

 

 

 

 

 

Register should be maintained containing details of GST liability outstanding to be adjusted against input credit or paid out directly

 

All Assessee

 

Accounting entries under GST

Despite initial transition challenges, GST shall bring forth clarity in various areas of business, including accounting and bookkeeping. While number of accounts is more apparently under GST, when you go through the accounting entries you would find it is more easy for record keeping. One of the advantages a trader will enjoy is that he can set off his input tax service with his output tax on the sale.

Electronic Cash and Credit Ledger

Every registered taxpayer shall have 3 ledgers under GST that will be automatically generated at the time of registration and shall be maintained electronically.

  • Electronic cash ledger– The Electronic cash ledger shall serve as an electronic wallet. The taxpayer is required to deposit money into his cash ledger. The money would be used to make the payment.
  • Electronic Credit Ledger– Input tax credit on purchases shall be shown here under three categories- 1) IGST (Integrated Goods and Services Tax), 2) CGST (Central Goods and Services Tax), 3) SGST (State Goods and Services Tax). The taxpayer shall be able to use the balance reflected in this account only for tax payment (not for interest, penalty, etc.)
  • E-liability ledger– The E-liability ledger shall show the total tax liability of a taxpayer after netting off for the particular month. The ledger shall be auto-populated.

Period of retention of accounts under GST

According to the GST Act, all registered taxable person should maintain the accounts books and records under GST for at least 6 years. This period shall be counted from last date of filing the annual return for that year.

The last date of filing annual return is 31st December of the following year. For instance- For the year 2017-18, the due date of filing the annual return is December 31, 2018, and the books and records of the same year should be maintained for six years from that period, i.e., 31st December 2023.

In case the taxpayer is part of any proceedings before any authority (First Appellate) or is under investigation then he is required to maintain books for 1 year period after the order of such proceedings or appeal is passed.

Consequences of not having proper records under GST

In case where the taxpayer fails to maintain proper records in relation to the goods and or services, then the proper officer will treat such unaccounted goods and or services as if the taxpayer had supplied them. The proper officer shall determine the tax liability on such unaccounted goods.

The taxable person shall be needed to pay the tax liability calculated along with penalty.

In terms of provision under Section 122 of the CGST Act where a registered person-

  • Falsifies;
  • Substitutes financial records;
  • Produces fake accounts and or documents or;
  • Furnishes any false information or return with an intent to evade tax payment due under this Act,

Such a person will be punished with a penalty that would be more than the amount of tax evaded or 10000 rupees, whichever is higher.

Section 122 (3) of the Act provides for penalties extending to 25000 rupees for any person who aids or abets any of the above mentioned offences.

Section 132 of the Act provides that if a registered person either commits or abets in-

  • Falsification;
  • Substitutes financial records;
  • Produces fake accounts and or documents or;
  • Furnishes false information or return with an intent to evade tax payment due under this Act,

Such a person would be punished with imprisonment of 6 months or fine or both.

Conclusion

Therefore it is quite necessary that proper accounts and records under GST should be maintained. You may seek the assistance of a professional to know the accurate details of the records to be maintained. In case of any query related to GST registration, you may contact Enterslice.

Read our article:Are you a Casual Taxable Person under GST? Know what provisions are applicable to you.

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Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on criminal and corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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