Accounts and records are the primary source of data for any organization’s financial reporting. Every law of Direct and Indirect Tax in our country also mandates that information in a prescribed manner has to be captured and preserved for a certain period of time. These accounts and records form the basis for returns filed by tax payers under each law.
In the current indirect tax regime, every tax law mandates certain accounts and records of transactions to be maintained for a specific period of time, apart from the regular books of accounts.
Under Excise, the general records to be maintained are the RG-1 register (Daily stock account of excisable goods), Form IV register (Register of receipt or issue of raw material), invoice book and job work register
Under Service Tax, the suggested records include the bill register, receipt register, debit/credit notes register, CENVAT credit register, etc
Under VAT, the records to be maintained include purchase records, sales records, stock records, VAT account containing details of input and output tax, works contract account, etc
These records are required to be retained for at least 5 years from the end of the financial year in which they were effected.
Under GST, the activities of manufacture, provision of taxable service and sale of goods will have a common law and hence, businesses can now maintain consolidated information which was maintained separately earlier.
Under GST, every registered taxable person is required to maintain correct accounts of the following details at the principal place of business specified in the registration certificate: –
- Manufacture of goods
- Inward and outward supply of goods and/or services
- Stock of goods
- Input tax credit availed
- Output tax payable and paid
If more than one place of business is specified in the registration certificate, accounts relating to each place of business must be kept at the respective places.
Maintaining books and records in electronic form will be ideal and convenient for accurate and timely compliance under GST.
Persons whose turnover during the financial year exceeds Rs. 1 crore
In addition to maintaining the accounts specified above, a registered person whose turnover during the financial year exceeds Rs. 1 crore is required to,
- Get the accounts audited by a Chartered Accountant or Cost Accountant and
- Submit a copy of the audited annual accounts and a reconciliation statement in Form GSTR- 9B while filing the annual return in Form GSTR-9.
In the reconciliation statement, the Chartered Accountant or Cost Accountant is required to certify that the value of supplies declared in the annual return reconciles with the audited annual financial statement.
Persons owning or operating a warehouse or godown
An owner or operator of a warehouse or godown or any other place used for storage of goods, irrespective of whether he is registered or not, is required to maintain records of the consignor, consignee and other details which are yet to be prescribed in the law.
How long should accounts and records be retained?
Every registered person is required to retain accounts and records for 5 years from the due date of filing of annual return for the year to which the accounts and records pertain.
For example: For accounts and records pertaining to Financial Year ’17-’18, annual return must be filed by 31st December ’18. These accounts and records must be retained till 31st December ’23.