Documents, Accounts and Records, Returns under GST

Documents, Accounts and Records, Returns under GST

1. Introduction to Documents, Accounts and Records, Returns under GST

Under GST, proper documentation and record-keeping are essential for compliance and transparency in tax transactions. The GST law prescribes various documents, accounts, and records that registered taxpayers must maintain.

2. Documents under GST

The GST regime mandates specific documentation for various transactions, which are essential for compliance, transparency, and audit purposes. Each document under GST has a unique purpose, ensuring that every transaction, whether a sale, purchase, or stock transfer, is documented in a manner that reflects the tax liabilities and entitlements accurately.

a. Types of Documents

1. Tax Invoice

A tax invoice is a crucial document issued for every taxable supply of goods or services. It is required for charging and documenting the GST applicable on a transaction. The tax invoice is also necessary for the recipient to claim an Input Tax Credit (ITC).

Contents of a Tax Invoice:

1. GSTIN of Supplier: Unique GST Identification Number of the supplier.
2. Invoice Number: A unique serial number for each tax invoice, following the prescribed format.
3. Date of Issue: The date when the invoice is issued.
4. Details of Buyer and Supplier: Includes name, address, and GSTIN.
5. Description of Goods or Services: Details and quantities of goods or services supplied.
6. HSN Code/SAC Code: Harmonized System of Nomenclature for goods and Service Accounting Code for services.
7. Taxable Value and Tax Rates: Separate rows for CGST, SGST, and IGST with their respective rates and amounts.
8. Signature: Authorized signature by the supplier or their representative.

Time Limit for Issuing Tax Invoices:

For Goods: At or before the time of supply.

For Services: Within 30 days from the date of supply.

Example Use: A manufacturer issues a tax invoice when supplying products to a wholesaler, including CGST and SGST or IGST based on the supply type.

1. Bill of Supply

A bill of supply is issued by registered taxpayers who are not charging GST, either because they supply exempt goods/services or are registered under the composition scheme (which allows small taxpayers to pay tax at a lower rate without claiming an input tax credit).

Contents of a Bill of Supply:

1. Supplier's and buyer's GSTIN (if applicable).
2. Unique bill number and date.
3. Description, value, and quantity of goods or services.

Example Use: A composition taxpayer, such as a small retailer, issues a bill of supply instead of a tax invoice since they do not charge GST on their sales.

1. Debit Note

A debit note is issued by the supplier to the buyer if there’s an upward adjustment in the invoice amount after the initial issuance. This might occur due to price revisions, additional taxes, or any other reason that increases the original value of the transaction.

Contents of a Debit Note:

1. Original invoice reference.
2. Reasons for issuance.
3. Details of the increased amount and tax impact.

Example Use: If a supplier discovers that they undercharged for the goods, they issue a debit note to recover the additional amount.

1. Credit Note

A credit note is issued when there’s a reduction in the taxable value of a supply. This may happen due to discounts, returned goods, or corrections in the original invoice.

Contents of a Credit Note:

1. Original invoice reference.
2. Reasons for the issuance.
3. Adjusted amount and tax reduction details.

Example Use: If a customer returns a portion of their purchase, the supplier issues a credit note to adjust the initial invoice value and reduce the GST liability accordingly.

1. Delivery Challan

A delivery challan is used in cases where goods are transported without an invoice. Common scenarios include job work, the return of goods, or goods sent on approval. The delivery challan ensures goods movement can be documented without a tax invoice.

Contents of a Delivery Challan:

1. Description of goods, quantity, and transporter details.
2. Signatures of both consignor and consignee.

Example Use: When goods are sent for repair or job work, a delivery challan is issued to track the movement without impacting GST records.

1. Receipt Voucher

A receipt voucher is issued when an advance payment is received for goods or services. This document confirms receipt of payment before the actual supply occurs.

Contents of a Receipt Voucher:

1. Details of the advance amount received.
2. Description of the goods or services to be supplied.
3. GST details on the advance received (if applicable).

Example Use: A service provider receiving an advance from a client issues a receipt voucher to document the transaction.

1. Payment Voucher

A payment voucher is required for transactions involving the reverse charge mechanism (RCM), where the buyer is liable to pay GST. The voucher documents the payment of GST by the buyer instead of the supplier.

Contents of a Payment Voucher:

1. Taxpayer details, voucher number, date, and RCM tax amount.
2. Description of the goods/services under RCM.

Example Use: A business hiring services from an unregistered transport service issues a payment voucher, documenting that it will pay the GST due under RCM.

b. Invoicing Requirements under GST

1. Contents of a Tax Invoice
   The invoice must include specific details as mandated by GST law, such as the supplier’s and recipient’s GSTIN, invoice date, and HSN/SAC codes. It should detail the taxable value, applicable tax rates, and CGST, SGST, and IGST components where applicable.
2. Time Limit for Issuing Invoices

1. For Goods: Tax invoices must be issued at the time of removal of goods, if the supply requires transportation, or at the time of delivery for other types of supplies.
2. For Services: The time limit for issuing an invoice is within 30 days from the date of supply of services.
1. Serial Number Format and Retention
1. Invoice numbers must follow a consecutive serial number format for easy tracking and compliance.
2. Retention: All invoices, including canceled invoices, must be retained for 6 years from the due date of filing the annual return.

3. Accounts and Records under GST

In the GST regime, accurate and comprehensive record-keeping is crucial for ensuring compliance and enabling smooth tax management. Every registered taxpayer must maintain specific accounts and records of their business activities as prescribed under GST law. These records help track transactions, determine tax liabilities, and support audit and assessment processes.

a. Accounts to be Maintained

Under GST, taxpayers are required to maintain a set of mandatory accounts and records at their place of business. Let’s explore each of these in detail:

1. Purchase Register

The purchase register records all purchases or inward supplies of goods and services. This register is essential for tracking taxable and non-taxable purchases, identifying eligible input tax credit (ITC), and complying with audit requirements.

Contents of Purchase Register:

1. Date of purchase.
2. Supplier details (name, GSTIN).
3. Invoice number and date.
4. Description, quantity, and value of goods/services.
5. Applicable tax rates and amount of GST paid.

1. Sales Register

The sales register records all sales or outward supplies of goods and services made by the business. This record helps calculate the tax liability on outward supplies and provides details for return filing.

Contents of Sales Register:

1. Date of sale.
2. Customer details (name, GSTIN).
3. Invoice number and date.
4. Description, quantity, and value of goods/services.
5. Applicable tax rates and amount of GST charged.

This register is particularly important for calculating output tax liability and reconciling with GSTR-1 (outward supplies return).

1. Stock Register

The stock register keeps an account of inventory, including raw materials, semi-finished goods, and finished goods. It is mandatory for businesses involved in manufacturing, trading, or any activity that involves inventory management.

Contents of Stock Register:

1. Opening and closing stock quantity and value.
2. Receipts, issues, and wastage of stock (if any).
3. Quantity and value of goods manufactured.

The stock register helps in determining the value of inventory at any point in time, which is essential for tax and audit purposes.

1. Input Tax Credit (ITC) Register

The ITC register tracks the input tax credit availed on inward supplies of goods and services. This register helps businesses claim ITC accurately and prevents double-claiming or errors.

Contents of ITC Register:

1. Date of purchase.
2. Supplier details (GSTIN, name).
3. Invoice details and amount of ITC availed.
4. Separate columns for CGST, SGST, and IGST.

Proper maintenance of the ITC register ensures that eligible input tax credits are claimed and helps prevent errors during tax audits or GST reconciliation.

1. Output Tax Liability Register

The output tax liability register records the tax liability on all outward supplies made by the business. It tracks the GST liability arising from sales or other taxable activities.

Contents of Output Tax Liability Register:

1. Date of sale.
2. Invoice details (customer name, GSTIN).
3. Amount of tax liability, segregated by CGST, SGST, IGST.

Maintaining an output tax register helps determine the total tax liability and aids in filing returns accurately.

1. Tax Payment Register

The tax payment register records all GST payments made by the taxpayer, including details of payment methods, challan numbers, and dates.

Contents of Tax Payment Register:

1. Date of payment.
2. Payment amount (CGST, SGST, IGST).
3. Challan number and method of payment (cash, ITC adjustment).

This register helps reconcile the GST payments made against the tax liability calculated from sales and purchase registers, ensuring accurate return filing.

b. Place of Records Maintenance

1. Primary Place of Business: All prescribed records should be maintained at the principal place of business, as registered with the GST authorities.
2. Additional Places of Business: If a taxpayer has multiple places of business, they should also maintain records at each location. Alternatively, these records can be maintained at a centralized location if prior approval from the GST authorities is obtained.
3. Electronic Record Maintenance: Records can be maintained in physical or electronic form. However, they must be readily accessible at the place of business to comply with GST audits and inspections. Additionally, if records are maintained electronically, a reliable backup should be ensured.

c. Retention Period of Records

1. Standard Retention Period: All records, documents, and accounts related to GST must be maintained for a period of 6 years from the due date of filing the annual return for the financial year to which such records pertain.
2. Special Cases of Retention:
1. 1.Litigation/Appeal: If there is an ongoing litigation, appeal, or assessment, records must be retained for 1 year after the final disposal of the matter, even if it extends beyond the 6-year period.

1. Significance of Record Retention: Proper record retention helps in facilitating smooth audits, assessments, and compliance checks by GST authorities. Failure to maintain records may lead to penalties and interest.

Importance of Maintaining Proper Accounts and Records

1. Ensuring GST Compliance

Proper record-keeping ensures timely compliance with GST regulations, accurate calculation of tax liabilities, and filing of GST returns.

1. Facilitating Input Tax Credit (ITC) Claims

Accurate and complete records of purchases help in availing eligible input tax credits, minimizing tax liabilities, and optimizing cash flow.

1. Supporting GST Audits and Assessments

During a GST audit or assessment, the taxpayer must present complete and accurate records. Proper records demonstrate compliance and reduce the likelihood of penalties or scrutiny.

1. Reducing Errors in Return Filing

Maintaining separate records for different transactions (sales, purchases, stock, etc.) enables reconciliation with GST returns, helping avoid errors and discrepancies.

1. Enhanced Decision-Making

Organized and up-to-date records provide valuable insights into business transactions, inventory status, and tax liabilities, supporting informed business decisions.

Consequences of Non-Maintenance of Records

Failure to maintain proper records as per GST laws may attract various penalties and consequences, such as:

1. Monetary Penalties

The taxpayer may face penalties of up to ₹25,000 for non-maintenance of prescribed records.

1. Interest and Additional Tax

Incorrect calculation of tax liability due to inadequate record-keeping may result in additional tax liabilities along with interest.

1. Ineligibility for ITC

Without proper records, taxpayers might face challenges in claiming input tax credits, leading to increased tax liability.

1. Higher Scrutiny by Tax Authorities

Incomplete or incorrect records increase the chances of scrutiny, audit, and investigation by tax authorities, causing potential delays and business disruptions.

4. Returns under GST

Under GST, taxpayers need to file various returns based on the type of registration and the nature of transactions.

a. Types of Returns

Return Form	Filing Frequency	Applicable For	Description
GSTR-1	Monthly/Quarterly	Registered Taxpayers	Contains details of outward supplies of goods or services.
GSTR-2A	Auto-drafted	Buyer/Recipient	Contains details of inward supplies, based on the supplier's GSTR-1.
GSTR-3B	Monthly	All Registered Taxpayers	Summarized monthly return for payment of tax liabilities.
GSTR-4	Annually	Composition Scheme Taxpayers	Return for taxpayers under the composition scheme.
GSTR-9	Annually	All Regular Taxpayers	Annual return consolidating all monthly/quarterly returns.
GSTR-10	One-time	Taxpayers whose GST Registration is cancelled	Final return upon cancellation of GST registration.
GSTR-11	Monthly	Taxpayers with UIN	Return for taxpayers with a Unique Identification Number, such as embassies.

b. Filing Process and Due Dates

Monthly returns (GSTR-1 and GSTR-3B) are typically due by the 10th and 20th of the subsequent month, respectively.

Annual return (GSTR-9) is due by 31st December of the following financial year.

c. Late Fees and Penalties

Late fees apply for delays in return filing, typically ₹50 per day (₹25 for CGST and ₹25 for SGST) for normal returns, and ₹20 per day for nil returns.

Penalties may also include interest on unpaid tax dues, calculated at 18% per annum.

d. Importance of Timely Filing:

Timely filing helps in smooth ITC claims, prevents penalties, and ensures compliance. Non-compliance can lead to blockage of ITC, increasing the cash flow burden.

4.1 Records for Agents and Others

Agents and various intermediaries in the supply chain play a key role under the GST framework, and they are also required to maintain specific records related to their transactions. Here’s a breakdown of the requirements for agents and others as per GST regulations.

a. Who is Considered an Agent Under GST?

An agent under GST includes anyone who acts on behalf of another party (the principal) to supply or receive goods or services.

Examples include brokers, commission agents, and consignees who facilitate the sale, purchase, or distribution of goods and services for their principal.

b. Mandatory Records to be Maintained by Agents

Agents must maintain the following records to provide clear, auditable trails of their activities:

1. Details of Goods or Services Received or Supplied

This includes records of goods or services received from the principal or provided to the principal.

For goods, details like quantity, description, and value are essential.

1. Accounts of Goods or Services Delivered on Behalf of the Principal

This includes goods or services transferred or supplied as part of an agreement with the principal.

The records should clearly indicate the nature and value of these transactions, along with the GST amount collected or paid.

1. Tax Paid on Behalf of the Principal

Any tax paid on behalf of the principal needs to be recorded in detail, with the principal’s name, GSTIN, and invoice number.

This helps in claiming input tax credit and ensuring that the tax liability is accurately calculated.

1. Additional Documentation for Reconciliation

Agents should also keep any supporting documents such as contracts, agreements, bills, and invoices that help in verifying transactions with the principal.

c. Importance of Record-Keeping for Agents

1. Compliance and Transparency

Agents need to be transparent about their dealings with principals and ensure compliance by maintaining correct records.

1. Avoiding Tax Liabilities on Misreported Transactions

Proper record-keeping minimizes discrepancies that could lead to additional tax liabilities or penalties for both the agent and the principal.

d. Consequences of Non-Maintenance

Agents who do not maintain required records may face fines and penalties, particularly if records cannot substantiate their dealings on behalf of the principal.

5. Accounts to be Maintained by Transporters and Warehouse Keepers

Under GST, transporters and warehouse keepers are essential for the movement and storage of goods. They must also maintain specified records for audit purposes and to ensure compliance.

a. Requirements for Transporters

Transporters who move goods must maintain the following records:

1. Records of Goods Transported

Transporters must keep detailed records of goods transported, including the date of transport, description of goods, quantity, and the destination.

These records include details such as vehicle numbers, transport details, and the GSTIN of the consigner and consignee.

1. Records of GST Paid on Transport Services

If GST has been paid on the transport of goods, the transporter must document the amount and relevant tax details.

This helps in accounting for GST liability and facilitates tax credits where applicable.

1. E-Way Bill Documentation

The GST regime requires transporters to generate an e-way bill for the movement of goods over certain distances and value thresholds.

Records of all generated e-way bills must be maintained and reconciled with the transport records.

b. Requirements for Warehouse Keepers

Warehouse operators or warehouse keepers who store goods on behalf of other businesses must maintain these records:

1. Stock Records of Goods Stored

Warehouse keepers must maintain detailed stock records for all goods received, stored, and released from the warehouse.

The records must include the details of goods, quantity, storage period, and the identity of the consigner and consignee.

1. Accounts of Goods Released

They must document when goods are dispatched or handed over, including the GSTIN of the recipient.

These records must clearly indicate the date, description, and quantity of goods, ensuring accurate traceability.

1. GST Payment on Warehouse Services

If GST is applicable on warehousing services, records of tax payments should be maintained.

Proper documentation of GST paid allows the warehouse keeper to claim input tax credits and ensure accurate tax calculations.

1. Documentation of Agreements and Contracts

Contracts with clients and other documents related to storage agreements must be preserved as they substantiate transactions and facilitate audits.

c. Importance of Accurate Record-Keeping for Transporters and Warehouse Keepers

• Audit and Inspection Compliance

Transporters and warehouse keepers are subject to audit by GST authorities to ensure compliance, and these records facilitate seamless audits.

• Penalty Avoidance

Poor record-keeping could lead to penalties or disputes with GST authorities, especially during reconciliation processes.

6. Annual Return and Audit of Accounts

A. Annual Return (GSTR-9)

Who Files: All registered taxpayers, excluding those under the composition scheme, must file GSTR-9.

Details to Furnish:

1. Summary of all supplies made and received during the year.
2. Details of tax paid, ITC claimed, and refunds.
3. Details of adjustments or rectifications made.

Due Date: 31st December of the following fiscal year.

Purpose: It consolidates monthly or quarterly returns and provides an annual summary of business activities, tax payments, and adjustments.

B. Audit Under GST

The GST regime has stringent audit requirements to ensure businesses comply with tax laws and maintain transparency. A GST audit is a comprehensive review of a business's records, returns, and compliance.

a. Who Needs to Undergo a GST Audit?

Under GST law, a mandatory audit is required for businesses with an aggregate turnover exceeding a specified threshold in a financial year. However, voluntary audits may also be conducted by businesses seeking to ensure compliance.

Turnover Threshold: Businesses with an annual turnover of ₹2 crore or more are required to have their accounts audited by a Chartered Accountant or Cost Accountant.

b. Types of GST Audits

1. General GST Audit

Conducted annually for taxpayers who meet the turnover threshold.

The audit includes reviewing returns filed, accounts maintained, and compliance with GST provisions.

1. Special GST Audit

Ordered by GST authorities if they suspect discrepancies or irregularities in compliance.

Conducted by a Chartered Accountant or Cost Accountant appointed by the tax authority.

This audit can be more detailed and may require additional information or records from the taxpayer.

1. Departmental Audit

Conducted by the GST department directly.

It typically involves verification of tax payment records, returns filed, and other compliance documents.

c. Steps in the GST Audit Process

1. Preparation and Verification of Records

The taxpayer must prepare all relevant records, including invoices, returns, tax payment records, and account books.

1. Assessment of Returns and Compliance

Auditors assess the accuracy of returns filed and match them against business records.

The accuracy of tax paid, input tax credits claimed, and output tax liability is verified.

1. Reconciliation

Auditors reconcile discrepancies found during the audit. Any mismatch between returns filed and records maintained could lead to additional scrutiny.

If discrepancies are found, auditors may make adjustments to ensure correct tax payment.

1. Preparation of the Audit Report

Post-audit, the auditor prepares a report outlining their findings.

If additional tax is due or compliance issues are found, they may suggest corrective actions.

1. Submission of Audit Findings

Audit findings are submitted to the tax authorities, and any additional tax liability must be paid by the taxpayer.

d. Consequences of Audit Findings

If discrepancies are found during an audit, the taxpayer may be subject to the following:

1. Additional Tax Liability

Any unpaid tax amount, along with interest and penalties, may be assessed.

1. Penalties for Non-Compliance

Non-compliance with audit requirements can result in fines and penalties.

1. Further Investigation or Scrutiny

In cases of significant discrepancies, authorities may initiate further investigation or scrutiny of business records.

e. Importance of the GST Audit

1. Ensures Compliance with GST Law

GST audits enforce adherence to tax laws, ensuring that businesses remain compliant with GST requirements.

1. Transparency and Accountability

Audits provide transparency in business operations and tax payments, supporting the government’s objective of fair taxation.

1. Reduction of Errors in Future Compliance

Regular audits help businesses identify and correct errors in tax calculations and filings, reducing the likelihood of future non-compliance.