A Comprehensive Guide to Books of Accounts to be Maintained under GST
Maintenance of books of account and related records is an important compliance requirement under the GST regime. India’s Goods and Services Tax (GST) regime has streamlined the tax structure, making it more efficient and transparent.
However, with this new structure comes the responsibility for businesses to maintain specific books of accounts. Proper record-keeping is a legal requirement under the GST law and a crucial element for smooth business operations, audits, and compliance. In this blog, we’ll explore the various books of accounts that businesses must maintain under the GST Act.
Maintenance of electronic records
The records under GST law may be maintained in physical form as well as in electronic form. In case it is maintained in electronic form, the GST law requires that it shall be authenticated by digital signature.
As per Proviso to Sec. 35 (1) of the CGST Act, “The registered person may keep and maintain such accounts and other particular in electronic form in such manner as may be prescribed”.
Place of maintenance of books of account
Every registered person under GST must maintain all records at his principal place of business as prescribed under Section 35 of the Central Goods and Service Tax Act, 2017 read with Rule 56 of the Central Goods and Service Tax Rule, 2017.
Therefore, every registered person shall keep the books of account at the principal place of business and books of account relating to the 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.
In case there are multiple business locations in a State, the books of account pertaining to the principal place of business is required to be kept at the principal place of business and those pertaining to the additional place of business are to be kept at the respective additional place of business.
List of accounts & records to be maintained under GST
Every registered person must maintain records of-
- Register of Goods Manufactured or Produced
- Purchase Register (Inward supply of goods or services)
- Sales Register (Outward supply of goods or services)
- Stock of goods
- Input tax credit availed
- Output tax liability
- Output Tax Payable and Paid
- Advance Paid/ Received Register
- Credit Note and Debit Note records
- e-Way Bill records or register
- Fixed asset records or register
- Other particulars as may be prescribed
1. Sales Register
The Sales Register is one of the most critical documents under GST. Account of all the sales made within a tax period must be maintained. Maintaining an accurate sales register is essential for filing the GSTR-1 return, which reports outward supplies. This register should include details such as:
- Invoice number and date
- Name of Customer/buyer including GSTIN (if registered)
- Place of Supplier
- Name of State
- Description of goods or services sold with HSN/SAC code
- Value of goods or services
- Tax Rate and amount of GST charged
- Bifurcation of Tax (such as IGST, CGST and SGST)
2. Purchase Register
The Purchase Register records all purchases made by the business, including goods and services. This register should contain:
- Invoice number and date
- Details of the supplier, including GSTIN
- Description of goods or services purchased
- Value of goods or services
- Rate and amount of GST paid
- Input tax credit (ITC) claimed
This register is vital for reconciling with GSTR-2B and ensuring that input tax credit is appropriately claimed.
3. Stock Register
A Stock Register keeps track of all inventory or raw materials held by the business. This includes details such as:
- Opening balance of stock
- Quantity and value of goods received
- Quantity and value of goods sold
- Closing balance of stock
Maintaining an accurate stock register is crucial, especially for manufacturing units, as it helps in tracking the movement of goods and assessing the value of closing stock.
4. Input Tax Credit (ITC) Register
The ITC Register is used to track the input tax credit that the business is eligible to claim. This register should maintain the details of the Input Tax Credit availed for a given tax period. This register should include:
- Details of input goods or services
- Bifurcation of GST Rate and amount along with category (Inputs, Input Service & Capital Goods)
- GST paid on inputs
- Input tax credit availed
- Input tax credit utilized
Proper maintenance of the ITC register is essential for ensuring that the business claims the correct amount of input tax credit and avoids any discrepancies during audits.
5. Output Tax Liability Register
This register tracks the GST liability that the business needs to pay on the sale of goods or services. It includes:
- Total output tax liability for the period
- Tax paid in cash or through ITC
- Balance tax liability, if any
Maintaining this register ensures that the business accurately calculates and pays its GST liability on time, avoiding interest and penalties.
6. Tax Payment Register
The Tax Payment Register records all the payments made towards GST, including details such as:
- Date of payment
- Amount paid
- Mode of payment (cash, cheque, electronic transfer)
- Challan or reference number
This register is crucial for tracking all tax payments and ensuring that they are reflected in the GST returns.
7. Credit Note and Debit Note Register
Credit and debit notes are issued when there is a change in the value of an invoice due to reasons like returns, discounts, or errors. This register should record:
- Date and number of credit/debit note
- Original invoice number
- Value of goods/services before and after adjustment
- GST amount adjusted
Keeping a detailed register of credit and debit notes helps reconcile accounts and ensure that adjustments are accurately reported in GST returns.
8. E-way Bill Register
The E-way Bill Register records the e-way bills generated for the movement of goods. It should include:
- E-way bill number and date
- Details of goods transported
- From and to addresses
- Mode of transport and vehicle number
This register is especially important for businesses involved in the transportation of goods, as e-way bills are a critical component of GST compliance.
9. Fixed Asset Register
The Fixed Asset Register records all the fixed assets owned by the business. It should include:
- Description of the asset
- Date of acquisition
- Purchase value
- GST paid on the asset
- Depreciation claimed
This register helps in tracking the assets of the business and is essential for calculating depreciation and determining the GST applicable on the sale of fixed assets.
10. Expense Ledger
The Expense Ledger records all expenses incurred by the business, including those on which GST is paid. It should capture:
- Date and description of the expense
- GST amount paid
- Input tax credit claimed, if applicable
This ledger is useful for managing business expenses and ensuring that the GST paid on eligible expenses is claimed as input tax credit.
Period for Retention of Accounts under GST
As per Section 36 of the CGST Act, 2017, every registered person must keep and maintain the accounts books and records till the expiry of 72 months (6 years) from the due date of furnishing the annual return for the year pertaining to such accounts and records.
Thus, we can conclude that maintaining these books of accounts is not just a compliance requirement under GST law but also a best practice for efficient business management. Accurate and up-to-date records help in smooth GST audits, timely filing of returns, and avoiding penalties.
Businesses should ensure that these registers are maintained in either physical or electronic form and are readily available for inspection by the tax authorities when required.
By keeping detailed and accurate records, businesses can navigate the complexities of GST compliance with ease, ensuring that they remain in good standing with the tax authorities while optimizing their input tax credit claims.
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