Maintenance of books of accounts and necessary supporting and relevant records are highly essential requirements for proper management and control of the business operations. This will facilitate the correct receipt and payment of cash and other transactions entered by the company. It is mandatory to maintain the books of accounts under Indian Companies Act, 2013 and GST Act, 2017. Hence accounts maintenance in India is compulsory.
Under GST Act, 2017, as per section 35 of the CGST Act, 2017,
“Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of—
Accordingly, a registered person under GST is require to maintain the records as mentioned in section 35 of the CGST Act, 2017. However, a person may maintain additional records for decision making or for other useful information, such as:
It may be noted that-
Recording of goods lost or stolen etc.
A person is required to record the details of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples properly in its books of accounts. In case where the registered person fails to account for the goods or services or both then 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 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful misstatement or suppression of facts) or section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful misstatement or suppression of facts), as the case may be, shall, mutatis mutandis, apply for determination of such tax.
Period of Retention of Accounts [Section 36 of the CGST Act, 2017]
Under GST, every registered person required to keep and maintain/retain books of account or other records until the expiry of 72 months from the due date of furnishing of annual return, i.e., 31st December for the year pertaining to such accounts and records.
It may be noted that a registered person, who is a party to an appeal or revision or any other proceedings before any Appellate Authority or Revisional Authority or Appellate Tribunal or court, whether filed by him or by the Commissioner, or is under investigation for an offence under Chapter XIX, shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a period of 1 year after final disposal of such appeal or revision or proceedings or investigation, or for the period specified above, whichever is later.
Ledger Accounts to be maintained Under GST
The CGST and SGST will be charged on intra-state supplies whereas the IGST will be charged on all inter-state supplies. Therefore separate ledger account is required to be maintained related to CGST, SGST/UTGST, IGST and Compensation Cess. Following ledgers to be created under books of accounts:
|Statement of Financial Position|
|Capital and Reserves|
(a) 0.125%/1.5%/2.5%/6%/9%/14% Output CGST account
(b) 0.125%/1.5%/2.5%/6%/9%/14% Output SGST account
(c) 0.25%/3%/5%/12%/18%/28% Output IGST account
(d) Output Compensation Cess account
(e) GST under Reverse Charge Mechanism
(f) GST on Advance
(g) GST due to litigation, if any,
(h) Electronic Liability CGST A/c,
(i) Electronic Liability SGST A/c,
(j) Electronic Liability IGST A/c.
(k) Electronic Liability Compensation Cess A/c
(a) Input CGST A/c,
(b) Input SGST A/c,
(c) Input IGST A/c,
(d) Input Compensation Cess A/c
(e) Provisional ITC CGST A/c,
(f) Provisional ITC SGST A/c,
(g) Provisional ITC IGST A/c,
(h) Provisional ITC Compensation Cess A/c
(i) Electronic Credit CGST A/c,
(j) Electronic Credit SGST A/c,
(k) Electronic Credit IGST A/c,
(l) Electronic Credit Compensation Cess A/c
(m) Electronic Cash CGST A/c,
(n) Electronic Cash SGST A/c,
(o) Electronic Cash IGST A/c,
(p) Electronic Cash Compensation Cess A/c
(q) Cash/Bank A/c
Statement of Profit and Loss
(a) Local B2B Supply A/c,
(b) Local B2C Supply A/c,
(c) Interstate B2B Supply A/c,
(d) Interstate B2C Supply A/c,
(e) Export Supply A/c,
(f) Exempt Supply A/c,
(g) E-Com Supply A/c.
(a) Purchases A/c,
(b) Exempt Purchases A/c,
(c) Expenses A/c,
(d) Inward Supply-Purchases A/c.
In addition, taxpayers must be able to produce, on demand, an account of the audit trail and inter-linkages, including the source document (paper or electronic), financial accounts, record layout, data dictionary, an explanation for codes used, and the total number of records in each field along with sample copies of documents. The GST has extensive accounting and record-keeping requirements. Although some of the more cumbersome manufacturing excise tax record-keeping requirements are eliminated under GST, they’re replaced by similarly stringent requirements. The onus is therefore on professionals and accountants to keep informed and in compliance with the new GST law, rules, and regulations.