Requirement of Bookkeeping under GST

Ashish M. Shaji

04 Nov, 2020

With the introduction of GST, everybody is talking about the change it has brought in indirect tax regime in India and how it will revolutionize the taxation system in India. This change is not just on the external level for businesses, they will be impacted on a daily basis.

Everyday transactions of the business will be impacted, for example, the GST invoices will have to state the GSTIN No. of the business and they have to keep a record of their suppliers and customers in the same way. Businesses will be required to alter their Bookkeeping under GST.

Significance of Bookkeeping under GST

Many people might take it in a negative way as the compliance related to book-keeping will increase but one should not see it in a negative light only as this will bring transparency and simplification in the process of bookkeeping. It will be a difficult transition for taxpayers under GST who were registered under old Acts as they will have to make necessary entries relating to such transition which might prove to be a complicated task for certain taxpayers. Once this transition period ends, the accounting and recordkeeping procedure becomes quite easy and simplified.

Under GST, in order to make sure no tax is evaded, taxpayers are required to maintain all the minute records including invoices, bill of supply, debit note, credit note, refund vouchers, payment vouchers etc.

Who is required to maintain records under GST?

The following persons are required to maintain records:

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

Bookkeeping under GST: What Records are to be maintained?

Chapter VIII of Central Goods and Service Tax Act^[1] has provided provisions relating to bookkeeping under GST and maintenance of the records of an organization under the head “Accounts & Records”.

It states that clear records and accounts of the following are to be maintained:

1. Goods Manufactured
2. Record of inward supply of goods or services
3. Record of outward supply of goods or services
4. Stock of goods
5. Input tax credit received
6. The tax liability of the taxpayer and tax already paid by him.
7. Accounts of any other particular as required by law.

Along with the maintenance of above-mentioned accounts, the taxpayer is also required to maintain records of the following:

1. Name and address of suppliers from whom he had acquired goods or services, which are chargeable under GST.
2. Name and address of persons to whom he had supplied goods or services to, which are chargeable under GST.
3. Address of the location where goods are stored, this will include the places where goods are stored during transit too. Along with the address, information stock stored should also be maintained.

Bookkeeping under GST: Where to Maintain Records?

Records are to be maintained at the place of business mentioned in the certificate of registration of GST. If more than one place of business is mentioned in the certificate, then such records are to be maintained in all such places.

If the taxpayer wishes to maintain such records and accounts in electronic form, then he can do that in the prescribed manner.

Important points to know relating to Record-Keeping

The following points must be noted:

• All registered taxpayers are required to maintain all the records and accounts as stated above.
• Along with the specified documents, Commissioner has the power to direct any additional class of taxpayers to maintain any additional documents for any specified purpose.
• If Commissioner is of opinion that a given class of taxpayers won’t be able to keep records as per the given norms, then he can permit them to maintain such records in a different prescribed form. However, the reasons for such relaxation are to be recorded in writing.
• Every transporter of goods or any person involved in the storage of goods either as an owner or operator of any godown or warehouse or any other specified place will be required to maintain records of the consignor, consignee, and details relating to goods, etc.
• If any goods are lost, stolen, destroyed written-off or disposed off by way of gifts and free samples, and no proper records relating to them are kept under this section, then the proper officer will determine the tax payable on such goods or services in the same manner as they were supplied in normal course of business.

Audit

The Act clearly specified GST audit requirements, it states that every taxpayer whose yearly turnover exceeds Two Crore Rupees is required to get his accounts audited by a chartered accountant or a cost accountant and shall submit a certified copy of reconciliation statement and audited annual accounts each in FORM GSTR-9C. He can make this submission either by himself on the common portal or through any facilitation centre notified by the Commissioner.

What is the consequence of not maintaining proper records?

In case where the taxpayer fails to maintain proper records in respect of goods or services, then the proper officer will treat such unaccounted goods/services as if the taxpayer had supplied them.

It may be noted that the taxable person shall be required to pay tax liability calculated with penalty.

Conclusion

We hope this helped you have some clarity regarding bookkeeping under GST, for any other query related to GST contact Enterslice.

Read our article: Problems of Fake GST Invoice and measures to address them