All About Accounts and Records Under GST (Detailed Information)

Accounts and Other Records: Assessment in GST is substantially focused around self-assessment. Every taxpayer thereby is expected to self-assess the liability, file the returns and pay the tax by the 20th of the following month. The authenticity and completeness of the same is subject to audits, inspection and that casts a responsibility upon the taxpayer to maintain the necessary accounts and records.

Every registered person is expected to maintain the necessary accounts and records at the principal place of business and these records could be electronic or manual.

Who must maintain accounts under GST?

Section 35 of Central Goods & Services Tax Act, 2017 states that every registered person shall maintain books of accounts at his principal place of business and where more than one place of business is specified in the certificate of registration, at every such place of business too.

It is the responsibility of the following persons to maintain specified records-

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

Every registered person whose turnover during a financial year exceeds the prescribed limit (2 crore) will get his accounts audited by a chartered accountant or a cost accountant.

What records must be maintained under GST?

Every registered person must maintain records of-

  • Production or manufacture of goods
  • Inward and outward supply of goods or services or both
  • Stock of goods
  • Input tax credit availed
  • Output tax payable and paid and
  • Other particulars as may be prescribed

Please read our article for a list of records to be maintained under GST.

What are the accounts which must be maintained under GST?

Section 35 of Central Goods & Services Tax Act, 2017 mandates that the following records must be maintained:

For example, under GST, a trader has to maintain the following a/cs (apart from accounts like purchase, sales, stock) –

  • Input CGST a/c
  • Output CGST a/c
  • Input SGST a/c
  • Output SGST a/c
  • Input IGST a/c
  • Output IGST a/c
  • Electronic Cash Ledger (to be maintained on Government GST portal to pay GST)

Audit requirements

Section 35 of Central Goods & Services Tax Act, 2017 also mandates that every registered person must get his accounts audited by a Chartered Accountant or a Cost Accountant if his aggregate turnover during a Financial Year exceeds Rs. 2 Crores.

Such person has the additional responsibility of furnishing along with the annual return:

  • Audited annual accounts and
  • Reconciliation statement duly certified which reconciles the value of supplies declared in the Annual Return with the Annual Audited Financial Statements

Accounting entries under GST

In spite of initial transition challenges, GST will bring in clarity in many areas of business including accounting and bookkeeping.

While the number of accounts is more apparently under GST, once you go through the accounting entries you will find it is much easier for record keeping. One of the biggest advantages a trader will have is that he can set off his input tax on service with his output tax on the sale.

Read our discussions on the accounting treatment of various transactions under GST answering queries on how to record and pass entries for the inter-state sale of goods, how to record utilisation of input tax credit etc.

Electronic Cash and Credit Ledger

Every registered taxpayer will have 3 ledgers under GST which will be generated automatically at the time of registration and will be maintained electronically.

    • Electronic Cash Ledger -The electronic tax liability register specified under sub-section (7) of section 49 shall be maintained in FORM GST PMT-01 for each person liable to pay tax, interest, penalty, late fee or any other amount on the Common Portal and all amounts payable by him shall be debited to the said register.
    • Electronic Credit Ledger- The electronic credit ledger shall be maintained in FORM GST PMT-02 for each registered person eligible for input tax credit under the Act on the Common Portal and every claim of input tax credit under the Act shall be credited to the said Ledger.
    • E-Liability Ledger: This ledger will show the total tax liability of a taxpayer after netting off for the particular month. This ledger will be auto-populated.

Period for Retention of Accounts under GST

Every taxpayer shall maintain the books of accounts and ancillary records, until the expiry of 72 months, from the due date of furnishing the annual return for the year to which the records relate.

However, a registered person who is party to an appeal / any other proceedings, before any authority / tribunal, shall have to maintain the accounts and books / records, pertaining to the matters of such appeal for a minimum period of 1 year after disposal of such appeal / revision as the case may be.

The last date of filing the Annual return is 31st December of the following year.

For example:

For the year 2017-2018, the due date of filing the annual return is 31.12.2018. The books & records of 2017-2018 must be maintained for 6 years, i.e., 31.12.2023

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.

Consequences of Not 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.