GST

All you need to know about Accounts Maintenance under GST

Section 35 of the CGST Act, 2017 prescribes every registered person under GST to maintain all records at his principal place of business. Any entry in the registers, accounts and documents shall not be erased, effaced or overwritten.  In this article, we shall closely understand accounts maintenance under GST.

Who should maintain accounts under GST?

The following persons are required to maintain specified records:

• The owner;
• The operator of warehouse or godown or any other place used for goods storage;
• Every transporter.

Every registered person with a turnover of more than 2 crore during a financial year will get his accounts audited by a CA or a cost accountant.

Accounts maintenance under GST: Records to be maintained under GST

Chapter VIII, Accounts and Records, provides that the registered person must maintain the following records:

• Production or manufacture of goods;
• Inward & outward supply of the goods and/or services;
• Stock of goods;
• Input tax credit availed;
• Output tax payable & paid;
• Other particulars as may be prescribed.

As such, every registered person should maintain the following accounts:

• Register of goods produced

This relates to the production and manufacture of goods. The account maintained should contain the details of any goods manufactured in a factory or a production house. It should be maintained by assesses performing manufacturing activities.

Every such person manufacturing goods should maintain monthly production accounts.

• Purchase register

This reflects the purchases made for manufacturing goods and services. It should contain details of suppliers, name of state, GSTIN etc.

• Sales Register

This is an account which should be maintained of sales made within a tax period. It should contain customer details, GSTIN, place of supplier, category of sales, tax rate^[1] and tax amount. Every registered person should maintain an accurate account of the goods or services imported or exported or of supplies attracting tax payment on reverse charge.

• Stock Register

This should be maintained and should contain a correct stock of inventory available on daily basis or at any point, and the register should also contain particulars of the opening balance, supply, goods lost, stolen, destroyed or disposed of. It should be maintained by all assesses, apart from the person paying tax under Section 10.

• Taxes payable and ITC availed

This register should contain details of input tax credit availed for a specific tax period having bifurcation of the tax rate and tax amount. It should maintain the details of GST paid for a specific tax period and should also contain invoices, credit and debit notes.

• Advance paid/received register

This should contain the details of advances received, paid, adjustments made and tax paid/adjusted.

• Services supplied

Every registered person who supplies services is required to maintain an account enumerating a description of goods used in the provision of services.

• Electronic ledgers and records

An electronic backup of records should be maintained and preserved in a way that in case of destruction of such records, the information may be restored in a reasonable time. 

Accounts maintenance under GST: Period for retention of accounts

According to Section 36 of the CGST Act 2017, every registered person should keep and maintain accounts books and records for minimum 72 months (6 years) from the due date of furnishing annual return for the year relating to such accounts & records. 

In case a registered person is a party to an appeal or revision or any other proceedings before an appellate authority or revision authority or appellate tribunal or court, or is under investigation for an offence shall retain the books of accounts and records relating to such proceedings for one year after final disposal of the appeal or revision or proceedings or investigation. 

Consequence of failure of accounts maintenance under GST

If the taxpayer fails to maintain accurate and proper records related to goods or services, such taxpayers will have to face penal consequences. The proper officer would treat unaccounted goods and services as if they were supplied by the taxpayer.

The tax liability shall be applied then and determined by the officer on such unaccounted goods and services. This tax liability should be paid by taxpayer along with its penalty fee. As per Section 122(1) states that where a taxable person fails to keep, maintain or retain books of account and other documents or fails to furnish information or documents called for by an officer or furnishes false information shall be liable to pay a penalty of 10k rupees or an amount equal to tax evaded, whichever is higher.

Conclusion

Businesses should ensure that they properly comply with accounts maintenance under GST. It should be ready for verification by an authorized GST authority. The accounts maintained under GST together with invoices, bills of supply, credit and debit notes, inward supply, and outward supply should be maintained for at least 6 years from the date of furnishing GST annual return. The GST accounts and records should be kept at related place of business as provided in the certificate of registration.

Read our Article: How to check GST Registration Status?