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June 15, 2020

Know all about Maintaining Books of Accounts & Records under GST

by Rubina Dsouza in GST

Know all about Maintaining Books of Accounts & Records under GST


Maintaining books of accounts is often considered as a tedious and unwanted process. Maintaining proper books of accounts is not only mandatory but it is also beneficial as it helps to compute the amount of tax liabilities, input tax credit (ITC), refunds etc. They act as proof for further litigations.

Provision in Law

Section 35 of the CGST Act, 2017 provides that every registered person shall keep and maintain all records at his principal place of business. Any owner, operator of warehouse, godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not, is to maintain the specified records. Commissioner may also notify a class of taxable persons to maintain additional accounts or documents for specified purpose or to maintain accounts in other prescribed manner.

Details of records to be kept are as follows:-

  1. Accounts of stock pertaining to goods received and supplied (containing particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples and balance of stock including raw materials, finished goods, scrap and wastage thereof)
  2. Separate account of advances received, paid and adjustments made thereto
  3. An account containing the details of tax payable, tax collected and paid, input tax, ITC claimed, tax invoice, credit note, debit note, delivery challan issued or received during any tax period [not required for persons under Composition Scheme]
  4. Names and addresses of suppliers from whom goods or services have been received
  5. Names and addresses of the persons to whom supplies have been made
  6. Addresses of the premises where the goods are stored including goods stored during transit along with the particulars of the stock stored therein
  7. Monthly production accounts, showing the quantitative details of raw materials or services used in the manufacture and quantitative details of the goods manufactured including the waste and by products.
  8. Accounts showing the quantitative details of goods used in the provision of services, details of input services utilised and the services supplied.

What records are to be maintained according to GST provisions?

Every registered person shall maintain a true and correct account of:-

  1. Production or manufacture of goods
  2. Inward and outward supply of goods, services or both
  3. Stock of goods
  4. Input tax credit (ITC) availed
  5. Output tax payable and paid
  6. Such other particulars as may be prescribed
  7. Goods or services imported or exported
  8. Supplies attracting payment of tax on reverse charge

Where are the books of accounts to be maintained?

Every registered person shall keep and maintain the required books of accounts at his principal place of business. In case, more than one place of business is specified in the registration certificate, the accounts relating to each place of business shall be kept at such places of business.

What happens when any books are stored at a place other than those mentioned in the registration certificate?

If any documents, registers, or any books of account belonging to a registered person are found at any premises other than those mentioned in the registration certificate, they shall be presumed to be maintained by the said registered person.

If any taxable goods are found to be stored at any place other than those declared without any valid documents, the proper officer shall determine the amount of tax payable on such goods as if such goods have been supplied by the registered person.

Is any exemption available from maintaining books of accounts?

Circular No. 23/23/2017- GST dated 21.12.2017 provides relaxation from maintenance of books of accounts relating to additional places of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc.

Are any separate accounts to be maintained for works contract?

Separate accounts for works contract are to be maintained showing:-

  1. Names and addresses of the persons on whose behalf the works contract is executed
  2. Description, value and quantity of goods or services received for the execution of works contract
  3. Description, value and quantity of goods or services utilized in the execution of works contract
  4. Details of payment received in respect of each works contract
  5. Names and addresses of suppliers from whom goods or services are received

For how long is a registered person required to maintain books of accounts?

1.All accounts maintained including all invoices, bills of supply, credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and outward supply shall be preserved for 72 months (6 years) from the due date of furnishing of annual return for the year pertaining to such accounts and records.

For instance, Mr A is a registered supplier under GST. The due date for filing annual return for the year 2018-2019 is 31.12.2019. The books & records of 2017-2018 must be maintained for 6 years, i.e., 31.12.2024.

2. A registered person, who is a party to an appeal or revision or any other proceedings whether filed by him or by the Commissioner, or is under investigation for an offence, has to retain the records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a period which is later of:-

i. 1 year after final disposal of such appeal, revision, proceedings or investigation,

ii. 72 months (6 years)

Can the records be erased?

  1. Any entry in registers, accounts and documents shall not be erased or overwritten
  2. All incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation and thereafter correct entry shall be recorded
  3. When the registers and documents are maintained electronically, a log of every entry edited or deleted shall be maintained.

Are there any requirements for maintaining electronic records?

  1. Proper electronic back-up of records is required so that in the event of destruction of such records, the information can be restored within a reasonable period of time.
  2. The electronic records/documents are to be produced on demand, duly authenticated, in hard copy or in any electronically readable format.
  3. The registered person shall, on demand, provide the details of such files, passwords of such files and explanation for codes used, where necessary, for accessing information stored in such files.

What are the consequences of not maintaining proper books of accounts?

  1. If the taxpayer fails to maintain proper records, then the proper officer shall treat such unaccounted goods/services as if the taxpayer had supplied them.
  2. The tax liability on such unaccounted goods will be determined by the Proper Officer.
  3. The taxable person will be required to pay the tax liability calculated along with penalty.

What records are to be maintained by owners or operators of godowns/warehouses and transporters?

  1. Every person engaged in the business of transporting goods shall maintain records of goods transported, delivered and goods stored in transit by him and for each of his branches.
  2. Every owner or operator of a warehouse or godown shall maintain books of accounts, with respect to the period for which particular goods remain in the warehouse, including the particulars relating to dispatch, movement, receipt, and disposal of such goods.
  3. The goods shall be stored in such manner that they can be identified item wise and owner wise and shall facilitate any physical verification or inspection, if required.

What additional records are to be maintained by Agents and Brokers?

The word Agent means a person, including a factor, broker, commission agent, del credere agent, an auctioneer or any other mercantile agent, who carries on the business of supply or receipt of goods or services or both on behalf of another. All agents or brokers are to maintain the following additional records:

  1. Particulars of authorization received by him from each principal to receive or supply goods or services on behalf of such principal separately
  2. Particulars including description, value and quantity of goods or services received on behalf of every principal
  3. Particulars including description, value and quantity of goods or services supplied on behalf of every principal
  4. Details of accounts furnished to every principal
  5. Tax paid on receipts or the supply of goods or services effected on behalf of every principal.

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