Understanding GST Accounting and Record-Keeping Rules in India

This article details Chapter 7 of the Central Goods and Services Tax (CGST) Rules, which focuses on the maintenance of accounts and records. The information is sourced from the official CBEC document. We will explore the various record-keeping obligations for registered individuals, rules for electronic records, and specific requirements for warehouse operators and transporters.

The original source content can be found at: http://www.cbec.gov.in/resources//htdocs-cbec/gst/cgst-rules-01july2017%20.pdf

Obligation for Registered Persons to Maintain Accounts

All registered individuals must keep accurate records of imported or exported goods and services, as well as supplies subject to reverse charge tax. These records should include supporting documents such as invoices, bills of supply, delivery challans, credit and debit notes, and various vouchers (receipt, payment, and refund).

Except for those paying tax under Section 10, every registered person needs to maintain detailed stock accounts for goods received and supplied. These accounts must track opening balances, receipts, supplies, and any goods lost, stolen, destroyed, written off, or given as gifts or samples. Stock balances for raw materials, finished goods, scrap, and wastage must also be recorded.

Registered persons are required to keep separate accounts for advances received, advances paid, and all related adjustments.

Any registered individual, except those under Section 10, must maintain records detailing tax liabilities (including those under sub-sections (3) and (4) of Section 9), tax collected and remitted, input tax, and claimed input tax credit. This also requires a register of tax invoices, credit notes, debit notes, and delivery challans issued or received in each tax period.

Registered persons must record: (a) the full names and addresses of suppliers of taxable goods or services; (b) the full names and addresses of recipients of goods or services, as mandated by this Chapter; and (c) the complete addresses of all storage locations, including goods in transit, along with stock details for each location.

Should taxable goods be found stored at undeclared locations without valid documentation, the authorized officer will assess the tax due on these goods as if they were supplied by the registered person.

All registered persons must keep their accounting records at their principal business location and any additional places of business listed on their registration certificate. These records encompass both physical books and electronic data stored on digital devices.

Entries in registers, accounts, and documents must not be erased, defaced, or overwritten. Non-clerical errors should be struck through, attested, and corrected. For electronic records, a comprehensive log of all edits or deletions must be kept.

Manually maintained volumes of account books by registered persons must be serially numbered.

If a registered person's documents, registers, or account books are discovered at premises not declared in their registration certificate, they will be presumed to belong to and be maintained by that registered person, unless proven otherwise.

Agents mentioned in Section 2, clause (5), must maintain specific accounts for each principal. These accounts should detail: (a) authorizations received to handle goods or services; (b) descriptions, values, and quantities of goods or services received for each principal; (c) descriptions, values, and quantities of goods or services supplied for each principal; (d) accounting information provided to each principal; and (e) taxes paid on behalf of each principal for receipts or supplies.

Registered manufacturers are required to maintain monthly production accounts, detailing the quantities of raw materials and services consumed, as well as the quantities of finished goods produced, including any waste or by-products.

Registered service providers must maintain accounts showing the quantities of goods used in service provision, details of input services utilized, and the specific services supplied.

Registered persons involved in works contracts must keep separate accounts for each contract. These accounts need to record: (a) names and addresses of clients; (b) descriptions, values, and quantities of goods or services acquired for the contract; (c) descriptions, values, and quantities of goods or services used in the contract; (d) payment specifics for each contract; and (e) names and addresses of goods or service suppliers.

Records covered by this Chapter can be maintained electronically, provided they are authenticated with a digital signature.

All accounts, invoices, bills of supply, credit/debit notes, and delivery challans pertaining to stocks, deliveries, and inward/outward supplies must be retained by registered persons for the duration specified in Section 36. Manually kept records should be stored at each registered business location, while digital records must be accessible from all such locations.

Carriers or clearing and forwarding agents responsible for goods on behalf of a registered person must keep accurate records of these goods. They are required to provide these details to the authorized officer upon request.

Registered persons must produce all required books of account, as mandated by any current law, when requested.

Creation and Management of Digital Records

Adequate electronic backups of records are essential. These backups must be maintained and preserved to ensure that information can be recovered promptly if the original records are destroyed due to accidents or natural disasters.

Registered persons who keep electronic records must produce authenticated versions of these documents or records upon request, either as hard copies or in an electronically readable format.

If accounts and records are stored digitally, the registered person must provide file details, passwords, and explanations for any codes necessary for access upon demand. A printed sample copy of the information stored in these files must also be provided.

Record-Keeping for Warehouse Owners, Operators, and Transporters

Any individual mandated to keep records and accounts under Section 35, sub-section (2), who is not yet registered, must submit their business information electronically via FORM GSTENR-01 on the common portal. This can be done directly or through a Commissioner-notified Facilitation Centre. Following validation, a unique enrollment number will be issued to the applicant.

Individuals enrolled under sub-rule (1) in one State or Union Territory will be considered enrolled in any other State or Union Territory.

Persons enrolled under sub-rule (1) must electronically update their details in FORM GST ENR-01 on the common portal when necessary. This update can be performed directly or via a Commissioner-designated Facilitation Centre.

In accordance with Rule 56: (a) Individuals involved in goods transportation must keep records of all goods transported, delivered, and stored in transit, including the GSTIN of registered consigners and consignees for each branch. (b) Warehouse or godown owners/operators must maintain accounts detailing the duration goods are stored, as well as their dispatch, movement, receipt, and disposal.

Godown owners or operators must store goods in a way that allows for item-wise and owner-wise identification. They must also facilitate physical verification or inspection by the proper officer upon request.