All About Accounts and Records under GST

Vaibhav Rathi

30 Mar, 2024

All taxpayers are required to self-assess the taxes required to be paid by them and file returns for each tax period. The department then carries out compliance verification through scrutiny of returns, audits, and investigations. This casts certain obligations on the taxpayer for keeping and maintaining accounts and records. As per Section 35 of the CGST Act, 2017 and Rules 56, 57, and 58 of the CGST Rules, 2017, every registered person is required to maintain all records at the principal place of business. In addition to this, the owner or operator of any warehouse or godown or any other place of storage of goods and every transporter, whether registered or not, are required to maintain accounts and records.

The provision also sanctions the Commissioner to prescribe a class of taxable persons to maintain supplementary accounts and records for specified purposes or to maintain accounts and records in a prescribed manner. Suppose a class of taxable persons is not in a position to maintain accounts as per the GST Law. In that case, the Commissioner is also empowered to allow that class of taxable persons to maintain accounts and records in such a manner as may be prescribed. In addition, if a registered person’s turnover exceeds the prescribed limit in any financial year, he shall have his account audited by a Cost Accountant or a  Chartered Accountant.

Who shall maintain accounts and records under GST?

The following persons are responsible for maintaining specified accounts and records:

1. The owner or operator of a warehouse or godown or any other place where goods are stored;
2. Every transporter

What are the documents and records required to be maintained?

Section 35 of the CGST Act 2017 states that all registered persons should maintain true and correct accounts of the following:

1. Production and manufacture of goods;
2. Purchase and sale of goods or services or both;
3. The stock of goods;
4. Output tax payable and paid;
5. Input Tax Credit availed; and
6. Such other particulars as may be prescribed.

The registered persons should maintain a record of the following:

1. Import and export of goods and services;
2. Supplies attracting payment of tax on the basis of reverse charge mechanism along with relevant documents such as invoices, bills of supply, debit notes¹, credit notes, delivery challans, receipt vouchers, refund vouchers, payment vouchers, and e-way bills;
3. Stock account of goods received or supplied by him with particular of opening balance, receipt, supply, goods lost, destroyed, stolen, written off or disposed of by way of gift or free samples and balance of stock including  finished goods, raw materials, scrap and wastage thereof;
4. A separate account of advances paid, received and adjustments made thereto;
5. An account containing details of tax payable, tax collected and paid, ITC claimed, tax invoice, debit note, credit note, delivery challan issued or received during any tax period;
6. Names and addresses of suppliers from whom goods and services have been received;
7. Name and addresses of persons to whom goods or services have been supplied;
8. The address of the premises wherever the goods are kept including goods stored during transit and particulars of the stocks stored therein;
9. Accounts of monthly production showing the quantitative details of raw materials or services used in the manufacture and quantitative details of goods so manufactured, including the waste and by-products thereof;
10. Accounts showing quantitative details of goods, details of input services utilized and services supplied;
11. Separate accounts for works contract giving the names and addresses of the persons on behalf of whom the works contract is executed, the value, description, and quantity of goods or services received for the execution of the works contract; value, description, and quantity of goods or services used in the execution of works contract; the details of payment obtained towards every works contract and the names and addresses of suppliers from whom the goods or services have been received.

Location of Accounts and Records

The books of account of a business shall be kept at the principal place of business and at every other place of business mentioned in the certificate of registration. The books of accounts include any electronic form of data stored on any electronic device. The digital data is authenticated if it contains digital signatures. If the accounts and records of a registered person are found at any premise other than those mentioned in the certificate of registration, then it shall be presumed to be maintained by the registered person only. If taxable goods are stored at any place other than that declared and without any cover of valid documents, then the proper officer may determine the amount of tax payable on such goods in the same manner as if the goods have been supplied by the registered person.

Correction in Accounts and Records

No entry in any register, accounts, or records shall be erased, effaced, or over-written unless it is of clerical nature. All corrections other than clerical ones shall be scored out under attestation, and then the entry should be recorded. Where the registered document along with other documents, are stored electronically, a log of every entry edited or deleted shall be maintained. Every volume of books of accounts stored manually by a registered person should be serially numbered.

Period of Preservation of Accounts and Records

All accounts and records shall be stored for a period of seventy-two months, i.e., six years from the date of furnishing the annual return for the year pertaining to such accounts and records. The accounts and records should be kept at a related place of business mentioned in the certificate of registration. Further, if a registered person is a party to an appeal or review or any other proceedings, then he shall maintain the accounts and records for a period of one year after the final disposal of the appeal or revision or proceedings or investigation or for a period of six years, whichever is later.

Electronic Records

The requirements prescribed for the maintenance of records in electronic form are as follows:

1. Keep proper electronic backup of records in such a manner that they can be recovered in the event of destruction of records.
2. Production of duly authenticated relevant documents on demand, whether in hard copy or in any electronically readable format.
3. The registered person who has stored the accounts and records in an electronic manner should, on demand, produce the details of such files, passwords of such files, an explanation for such files wherever necessary for access, and any other information required for the access along with a sample copy on a print form of the information stored in such files.  

Account and Records to be maintained by the owner or operator of Godown or Warehouse and Transporters or Carrier or a Clearing and Forwarding Agent

If the transporters, owners, or operators of Godown are not already registered, then they should submit the details relating to their business electronically on the Common Portal in FORM GST ENR-01. This shall generate a unique enrolment number which will be intimated. A registered person in any other State or Union Territory shall be deemed to be enrolled in that State or Union Territory. For the purpose of the E-way Bill, a registered transporter of one state or Union Territory having the same Permanent Account Number may apply for a unique common enrolment number by submitting the details of FORM GST ENR-02 using any one of his GSTIN. A unique common enrolment number shall be generated for the said transporter upon validation of the details furnished.

A person engaged in the business of transporting goods should maintain records of goods transported, delivered, and goods stored in transit by him and the GSTIN number of the registered consigner and consignee for each of his branches. The accounts and records should be maintained for the time period for which the particular goods remain in the warehouse. The goods should be stored item-wise and owner-wise so as to facilitate any physical verification or inspection if required at any time. 

A person having goods in the capacity of a carrier or a clearing and forwarding agent for delivery or dispatch thereof to a recipient on behalf of any registered person should maintain true and correct records of such goods and produce the details as and when required by the proper officer.

Conclusion

All registered persons are required to maintain the accounts and records as per section 35 of the CGST Act. Maintaining proper accounts and records is essential to determine the tax liability. On failure to maintain proper accounts and records, the proper officer can treat such goods or services as unaccounted.

FAQs

Read Our Article: All About GST on Cross Charge Transactions

1. https://en.wikipedia.org/wiki/Debit_note