Accounts and Records
Accounts and Records 11
This Module Includes
11.1 Introduction
11.2 Accounts and Records
11.3 Compulsorily Audit
11.4 Period for Retention of Accounts
11.5 Unique Common Enrolment Number
11.6 Consequences of Not Maintaining Proper Records
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Accounts and Records
SLOB Mapped against the Module
1. To develop detail understanding of various provisions of Goods and Services Tax (GST) to facilitate
valuation, computation of tax liability including management of input tax credit.
2. To obtain detail knowledge about the provisions under GST relating to accounts and record, annual returns
and dispute resolution to ensure better compliance.
3. To facilitate strategic decision making by appropriate management of various indirect tax issues.
Module Learning Objectives
After studying this module, the students will be able to:
~ Identify various types of books of account to be maintained by the registered person
~ Understand electronic records under GST
~ Explain Records to be maintained by owner or operator of godown or warehouse and transporters.
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Introduction 11.1
E
very registered person is required to self-assess the taxes payable and furnish a return for each tax period
(i.e. the period for which return is required to be filed).
The compliance verification is done by the department through scrutiny of returns, audit and/or
investigation. Thus, the compliance verification is to be done through documentary checks rather than
physical controls. This requires certain obligations to be cast on the taxpayer for keeping and maintaining accounts
and records.
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Accounts and Records 11.2
As per Section 35(1) of the CGST Act, 2017
Every registered person is required maintain a true and correct account of the following:
(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
(f) Any other particulars deemed necessary
The above records must be maintained at each place of business registered under GST.
In addition, the rules (i.e. Rule 56(1) of the CGST Rules, 2017) also provide that the registered person shall keep
and maintain records of—
(a) goods or services imported or exported or
(b) 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, refund
vouchers and e-way bills
Rule 56(2) of the CGST Rules, 2017 every registered person, other than a person paying tax under section 10,
shall maintain the 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.
It means the above records not required to be maintained by a supplier opting for composition levy.
Rule 56(3) of the CGST Rules, 2017 every registered person shall keep and maintain a separate account of
advances received, paid and adjustments made thereto.
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Rule 56(4) of the CGST Rules, 2017 every registered person, other than a person paying tax under section 10,
shall keep and maintain an account, containing the details of tax payable (including tax payable in accordance with
the provisions of sub-section (3) and sub-section (4) of section 9), 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.
It means the above records not required to be maintained by a supplier opting for composition levy.
Rule 56(5) of the CGST Rules, 2017 every registered person shall keep 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, where required
under the provisions of this Chapter;
(c) the complete address of the premises where goods are stored by him, including goods stored during transit
along with the particulars of the stock stored therein.
Rule 56(6) of the CGST Rules, 2017 if any taxable goods are found to be stored at any place(s) other than those
declared under sub-rule (5) without the cover of any valid documents, the proper officer shall determine the amount
of tax payable on such goods as if such goods have been supplied by the registered person.
Rule 56(7) of the CGST Rules, 2017 every registered person shall keep the books of account at the principal
place of business and books of account relating to additional place of business mentioned in his certificate of
registration and such books of account shall include any electronic form of data stored on any electronic device.
Rule 56(8) of the CGST Rules, 2017 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.
Rule 56(9) of the CGST Rules, 2017 each volume of books of account maintained manually by the registered
person shall be serially numbered.
Electronic Records: The following requirements have been prescribed for maintenance of records in electronic
form.
~ Proper electronic back-up of records 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.
~ Produce, on demand, the relevant records or documents, duly authenticated, 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.
Rule 56(10) of the CGST Rules, 2017 unless proved otherwise, if any documents, registers, or any books of
account belonging to a registered person are found at any premises other than those mentioned in the certificate of
registration, they shall be presumed to be maintained by the said registered person.
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Rule 56(11) of the CGST Rules, 2017 every agent referred to in clause (5) of section 2 shall maintain accounts
depicting the —
(a) particulars of authorisation received by him from each principal to receive or supply goods or services on
behalf of such principal separately;
(b) particulars including description, value and quantity (wherever applicable) of goods or services received on
behalf of every principal;
(c) particulars including description, value and quantity (wherever applicable) of goods or services supplied on
behalf of every principal;
(d) details of accounts furnished to every principal; and
(e) tax paid on receipts or on supply of goods or services effected on behalf of every principal.
Rule 56(12) of the CGST Rules, 2017 every registered person manufacturing goods 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(13) of the CGST Rules, 2017 every registered person supplying services 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(14) of the CGST Rules, 2017 every registered person executing works contract 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; and
(e) the names and addresses of suppliers from whom he received goods or services.
Rule 56(15) of the CGST Rules, 2017 the records under the provisions of this Chapter may be maintained in
electronic form and the record so maintained shall be authenticated by means of a digital signature.
Rule 56(16) of the CGST Rules, 2017 accounts maintained by the registered person together with all the invoices,
bills of supply, credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and outward
supply shall be preserved for the period as provided in section 36 and shall, where such accounts and documents
are maintained manually, be kept at every related place of business mentioned in the certificate of registration and
shall be accessible at every related place of business where such accounts and documents are maintained digitally.
Rule 56(17) of the CGST Rules, 2017 any person having custody over the 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 shall
maintain true and correct records in respect of such goods handled by him on behalf of such registered person and
shall produce the details thereof as and when required by the proper officer.
Rule 56(18) of the CGST Rules, 2017 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.
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Compulsorily Audit 11.3
Compulsorily Audit (Section 35(5) of the CGST Act, 2017 read with rule 80(3) of the CGST Rules, 2017):
(W.e.f. 01-08-2021 section 35(5) of CGST Act, 2017 has been omitted):-
Accordingly every registered person, other than an input service distributor, a person paying tax under
section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual
return which may include a self-certified reconciliation statement, reconciling the value of supplies declared
in the return furnished for the financial year, with the audited annual financial statement for every financial
year electronically, within such time and in such form and in such manner as may be prescribed.
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.
As per Rule 80(3) of the CGST Rules, 2017 every registered person whose aggregate turnover during a financial
year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35
and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM
GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by
the Commissioner.
w.e.f. 1st February 2019, The Central Government vide Notification No. 03/2019-CT, dated 29th January 2019
has amended CGST Rules, 2017 details of which are explained below:
Revised Comment
Rule 80 (3) Every registered person other than those Consequential changes provided in rule
[Annual Return] referred to in the proviso to sub-section that audit provisions shall NOT apply to
(5) of section 35, whose aggregate turnover any department of the Central Government
during a financial year exceeds two crore or a State Government or a local authority,
rupees shall get his accounts audited as whose books of account are subject to audit
specified under sub-section (5) of section 35 by the Comptroller and Auditor-General of
and he shall furnish a copy of audited annual India or an auditor appointed for auditing
accounts and a reconciliation statement, duly the accounts of local authorities under any
certified, in FORM GSTR-9C, electronically law for the time being in force.
through the common portal either directly or
through a Facilitation Centre notified by the
Commissioner.
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Notification no. 16/2020-CT, dated 23.03.2020: Provided that every registered person whose aggregate
turnover during the financial year 2018-2019 exceeds five crore rupees shall get his accounts audited as
specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a
reconciliation statement, duly certified, in FORM GSTR-9C for the financial year 2018-2019, electronically
through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
Rule 80(3) of CGST Rules, 2017 (vide Notification No. 79/2020-Central Tax, dated 15th October, 2020):
“Provided that for the financial year 2018-2019 and 2019-2020, every registered person whose aggregate turnover
exceeds five crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall
furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C for
the said financial year, electronically through the common portal either directly or through a Facilitation Centre
notified by the Commissioner.”
Records to be maintained by owner or operator of godown or warehouse and transporters:
The transporters, owners or operators of godowns, if not already registered under the GST Act(s), shall submit the
details regarding their business electronically on the Common Portal in FORM GST ENR-01. A unique enrolment
number shall be generated and communicated to them. A person enrolled in any other State or Union territory shall
be deemed to be enrolled in the State or Union Territory.
Every person engaged in the business of transporting goods shall maintain records of goods transported, delivered
and goods stored in transit by him and for each of his branches. Every owner or operator of a warehouse or godown
shall maintain books of accounts, with respect to the period for which particular goods remain in the warehouse,
including the particulars relating to dispatch, movement, receipt, and disposal of such goods. The goods shall
be stored in such manner that they can be identified item wise and owner wise and shall facilitate any physical
verification or inspection, if required at any time.
Amendment of section 35(6) of the CGST Act, 2017:
Section 35(6) Subject to the provisions of clause (h) of sub-section (5) of section 17, where the registered person
fails to account for the goods or services or both in accordance with the provisions of subsection (1), the proper
officer shall determine the amount of tax payable on the goods or services or both that are not accounted for, as if
such goods or services or both had been supplied by such person and the provisions of section 73 or section 74 [or
section 74A, inserted w.e.f. 1-11-2024, F.A. 2024 dt. 16-8-2024], as the case may be, shall, mutatis mutandis, apply
for determination of such tax.
Case Study: Risk-Based Biometric Aadhaar Authentication for High-Risk GST Registration Applicants
Background
The Central Board of Indirect Taxes and Customs (CBIC) introduced a pilot project in Gujarat for risk-based
biometric Aadhaar authentication to prevent fraudulent GST registrations. The process identifies high-risk applicants
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based on risk parameters and mandates biometric Aadhaar authentication along with document verification. This
pilot project has now been extended to Puducherry and Andhra Pradesh.
Case Details
State: Andhra Pradesh
Applicant Type: Sole Proprietor
Business Type: Electronics Retailer
Application Date: December 1, 2023
Scenario
1. Applicant Details:
Mr. Ramesh applies for GST registration in Andhra Pradesh as a sole proprietor using Form GST REG-01
and opts for Aadhaar authentication.
2. Risk-Based Identification:
• The GST common portal identifies Mr. Ramesh as a high-risk applicant based on predefined risk parameters
(e.g., frequent address changes and history of rejected applications).
3. Notification for Biometric Authentication:
• Mr. Ramesh receives a notification instructing him to visit a notified Facilitation Centre for biometric
Aadhaar authentication.
4. Process at the Facilitation Centre:
• Biometric Authentication: Mr. Ramesh’s Aadhaar number is authenticated using his fingerprint and iris
scan.
• Photo Capture: A live photograph of Mr. Ramesh is taken.
• Document Verification: The original documents uploaded with the application (e.g., PAN, address proof)
are verified.
5. Acknowledgment Issuance:
• After successfully completing the authentication, Mr. Ramesh receives an acknowledgment for his GST
registration application.
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Outcome
• Mr. Ramesh’s GST registration application is processed successfully after biometric authentication and
document verification.
• The process ensures transparency and reduces the risk of fraudulent registrations.
Key Takeaways
1. Objective: The project strengthens the registration process by ensuring that high-risk applicants undergo
additional scrutiny.
2. Applicability: Extended from Gujarat to Puducherry and Andhra Pradesh for high-risk applicants opting for
Aadhaar authentication.
3. Process Completion: GST registration applications for high-risk applicants are deemed complete only after
biometric authentication and document verification.
4. Impact: Enhances security in the GST registration process, minimizing fraud while maintaining ease of
doing business.
This case study highlights the practical application and importance of biometric Aadhaar authentication in
ensuring secure GST registrations.
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Period for Retention of
11.4
Accounts
Period for Retention of Accounts under GST (Section 36 of the CGST Act, 2017)
As per section 36 of the CGST Act, 2017 every registered taxable person must maintain the accounts books and
records for at least 72 months (6 years) from the due date of furnishing of annual return for the year pertaining to
such accounts and records. The period will be counted from the last date of filing of Annual Return for that year.
The last date of filing the Annual return is 31stDecember of the following year.
For example: For the year 2023-24, the due date of filing the annual return is 31.12.2024. The books & records
of 2023-2024 must be maintained for 6 years, i.e., 31.12.2030.
If the taxpayer is a part of any proceedings before any authority (First Appellate) or is under investigation, then
he must maintain the books for 1 year after the order of such proceedings/appeal has been passed.
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Unique Common Enrolment
11.5
Number
Unique Common Enrolment Number (Notification No. 28/2018-CT, dated 19-6-2018):
As per Rule 58(1A) of CGST Rules, 2017 (i.e. records to be maintained by transporters) a transporter who is
registered in more than one State or Union Territory having the same PAN, he may apply for a unique common
enrolment number by submitting the details in FORM GST ENR-02 using any one his GSTIN’s, and upon
validation of the details furnished, a unique common enrolment number shall be generated and communicated to
the said transporter:
Provided that where the said transporter has obtained a unique common enrolment number, he shall not be
eligible to use any of the GSTIN’s for the purpose of tax invoice, credit note and debit notes.
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Consequences of Not
11.6
Maintaining Proper Records
If the taxpayer fails to maintain proper records in respect of goods/services, then the proper officer shall treat
such unaccounted goods/services as if the taxpayer had supplied them. The officer will determine the tax liability
on such unaccounted goods.
The taxable person will be required to pay the tax liability calculated along with penalty.
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Exercise
A. Theoritical Questions
~ Multiple Choice Questions
1. Every registered person whose aggregate turnover during a financial year exceeds 2 crore rupees shall
get his accounts audited and furnish a copy of audited annual accounts and a reconciliation statement,
duly certified, in—
(a) Form GSTR-9
(b) Form GSTR-9C
(c) Form GSTR-11
(d) Form GSTR-11A
2. Period for Retention of Accounts under GST
(a) 72 months from the due date of furnishing of annual return for the year pertaining to such accounts
and records.
(b) 60 months from the due date of furnishing of annual return for the year pertaining to such accounts
and records.
(c) 180 days from the due date of furnishing of annual return for the year pertaining to such accounts
and records.
(d) 365 days from the due date of furnishing of annual return for the year pertaining to such accounts
and records.
3. Which records are required to be submitted under section 71(1)?
(a) Statements of annual financial accounts, duly audited, wherever required
(b) Cost audit report, if any, under section 148 of the Companies Act, 2013
(c) The income-tax audit report, if any, under section 44AB of the Income-tax Act
(d) All of the above
4. Registered person supplying services shall maintain the accounts showing—
(a) quantitative details of goods used in the provision of services
(b) details of input services utilized
(c) details of the services supplied
(d) All of the above
5. Where more than one place of business is specified in the certificate of registration, the accounts relating
to each place of business shall be kept at—
(a) principal address of Proprietor/Partner/ Director
(b) principal place of business
(c) such places of business
(d) any of the above
Answer:
1. b 2. a 3. d 4. d 5. c
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