Provisions of Accounts and Records under GST Law – Question Answers
Question 1: What are the records/documents are required to be maintained under GST Laws?
Answer: Section 35 and 36 of CGST Act, 2017 read with Rule 56 to 58 of CGST Rules, 2017 deals with provisions of Accounts and Records under GST Laws.
Section 35(1) of CGST Act, 2017 has cast duty on every registered person to keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of –
- (a) production or manufacture of goods;
- (b) inward and outward supply of goods or services or both;
- (c) stock of goods;
- (d) input tax credit availed;
- (e) output tax payable and paid; and
- (f) such other particulars as may be prescribed
In addition to the above, as per Rule 56 (1), every registered person shall keep and maintain a true and correct account of –
1) goods or services imported or exported or of supplies attracting payment of tax on reverse charge along with the relevant documents, including Invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers.
2) accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof.
3) advances received, paid and adjustments made thereto.
4) details of tax payable, tax collected and paid, input tax, input tax credit claimed, together with a register of tax invoice, credit notes, debit notes, delivery challan issued or received during any tax period
5) The particulars of –
- a) names and complete addresses of suppliers from whom he has received the goods or services chargeable to tax under the Act;
- b) names and complete addresses of the persons to whom he has supplied goods or services;
Further, if a registered person is engaged in –
manufacturing goods, he shall maintain monthly production accounts showing quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products thereof. [Rule 56 (12)]
supplying services, he shall maintain the accounts showing quantitative details of goods used in the provision of services, details of input services utilised and the services supplied. [Rule 56 (13)]
executing works contract, he shall keep separate accounts for works contract showing –
- a) the names and addresses of the persons on whose behalf the works contract is executed;
- b) description, value and quantity (wherever applicable) of goods or services received for the execution of works contract;
- c) description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract;
- d) the details of payment received in respect of each works contract;
- e) the names and addresses of suppliers from whom he received goods or services. [Rule 56 (14)]
Question 2: What is Document under GST Law?
Answer: It is important to note that the definition of document under CGST Act looks simple but is extensive as it takes its root to Information Technology Act, 2000.
As per Section 2 (41) of CGST Act, 2017, Document includes written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act, 2000.
Electronic record, as defined in Information Technology Act, 2000, means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche.
Question 3: What is the meaning of term “True and Fair”?
Answer: The term True and Fair is generally found in Auditing Standards.
The term True suggest that the Financial Statements are factually correct and have been prepared according to the relevant reporting framework e.g. Accounting Standard like IFRS. True means they do not contain any material misstatements that may lead to misled the stakeholders. Where material misstatements may result from material errors or omissions of transactions and balances in Financial Statements.
The term Fair implies that Financial Statements represents the information faithfully without any element of bias and they reflect the economic substance of transaction rather than just their legal form (i.e. substance over form).
Hence the combined reading of the term True and Fair implies that Financial Statements are free from material misstatements and faithfully represents the financial performance and position of the business entity.
Question 4: What is the meaning of term “True and Correct”?
Answer: The term True, as mentioned earlier, is to say something based on facts – i.e. whether something is factual, real or genuine or not. True is opposite to “false”.
Now it is important to know what is the meaning of term “Correct”.
The term Correct means something is free from error and in accordance with lawfulness. It deals with accuracy, whether something is right or not.
In short, the term –
- True is associated with factual position,
- Fair is associated with reasonableness, and
- Correct is associated with Accuracy, Precision and Validness.
Hence, the term True and Correct means factual and accurate/valid.
Question 5: What is the provision for alteration and deletion of documents?
Answer: As per Rule 56 (8), any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation and thereafter the correct entry shall be recorded and where the registers and other documents are maintained electronically, a log of every entry edited or deleted shall be maintained.
Question 6: Is Accounts and Records are subject to Audit under GST Laws?
Answer: As per Section 44 of CGST Act 2017, read with Rule 80, every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement.
U/s 44 (2) of CGST Act, 2017, the registered person shall also furnish the annual return for every financial year electronically on or before the thirty-first day of December following the end of such financial year.
Question 7: What is the period of retention of Accounts and Records?
Answer: As per Section 36 of CGST Act 2017, every registered person shall be required to keep and maintain books of account or other records in accordance with the provisions of u/s 35 shall retain them until the expiry of 72 months from the due date of furnishing of annual return for the year pertaining to such accounts and records.
Provided that a registered person, who is a party to an appeal or revision or any other proceedings before any Appellate Authority shall retain the books of account and other records pertaining to the subject matter of such appeal proceedings or investigation for a period of one year after final disposal of such appeal or revision or proceedings or investigation, or for the period specified above, whichever is later.
Retention of accounts and records for different period is explained as under –
|For the FY||Date of Annual Return||Records to be maintained upto|
|FY 2017-18 (From July 2017 to March 2018)||31st December 2018||31st December 2024|
|FY 2018-19||31st December 2019||31st December 2025|
|FY 2019-20||31st December 2020||31st December 2026|
As per Rule 56 (18), every registered person shall, on demand, produce the books of accounts which he is required to maintain under any law for the time being in force. (e.g. Pollution Laws/Labour Laws).
Question 8: What are provision for generation and maintenance of electronic records?
Answer: As per Rule 57, proper electronic back-up of records shall be maintained and preserved in such manner that, in the event of destruction of such records due to accidents or natural causes, the information can be restored within a reasonable period of time.
The registered person maintaining electronic records shall produce, on demand, the relevant records or documents, duly authenticated by him, in hard copy or in any electronically readable format.
Where the accounts and records are stored electronically by any registered person, he shall, on demand, provide the details of such files, passwords of such files and explanation for codes used, where necessary, for access and any other information which is required for such access along with a sample copy in print form of the information stored in such files.
Question 9: What are consequences of failure to maintain Accounts and records?
Answer: As per Section 35(6), where registered person fails to account for the goods or services in accordance with the Section 35 read with rules framed thereunder, the proper officer shall determine the amount of tax payable on the goods or services that are not accounted for, as if such goods or services had been supplied by such person and the provisions of section 73 or section 74, as the case may be, shall, mutatis mutandis, apply for determination of such tax.
Section 73 deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts.
Section 74 deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts by reason of fraud or any willful misstatement or suppression of facts.