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.

Current regime

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.

GST regime

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: –

Accounts and Records to be maintained by Registered Persons Manufacturer Trader Service Provider
Inward and outward supply of goods and/or services✔✔✔
Imports and exports✔✔✔
Supplies on which tax is paid on reverse charge✔✔✔
Separate account of advances received, paid and adjustments✔✔✔
Names and complete addresses of suppliers from whom taxable goods or services are received✔✔✔
Names and complete addresses of persons to whom goods or services are supplied✔✔✔
Input tax and input credit availed*✔✔✔
Tax payable (including tax payable on reverse charge), collected and paid *✔✔✔
Complete addresses of the premises where goods are stored, including premises where goods are stored during transit, along with details of the goods stored✔✔×
Stock in respect of goods received and supplied, containing details of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed as gift or free samples and balance of stock, including raw materials, finished goods, scrap and wastage *✔✔×
Monthly production accounts showing quantity of raw materials or services used in manufacture and quantity of goods manufactured, including waste and by products✔××
Quantity of goods used to provide services, details of input services utilised and services supplied××✔

* These accounts and records are not required to be maintained by persons paying tax under the composition scheme.

Supporting documents to be kept by registered persons
Tax invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers
Manner in which accounts and records should be maintained
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.
Accounts and records should be maintained separately for each activity, such as manufacturing, trading, provision of service
Each volume of books of accounts maintained manually should be serially numbered.
Any entry in registers, accounts and documents should not be erased or overwritten and incorrect entries (other than clerical errors) should be scored out under attestation and later, the correct entry should be recorded. Where the registers and other documents are maintained electronically, a log of every entry edited or deleted should be maintained.
If accounts are maintained in electronic form,
–> The records should be authenticated by a digital signature
–> Backup of records should be available such that even if they are destroyed due to accidents or natural causes, they can be restored within a reasonable period of time
–> The records or documents should be produced on demand, authenticated by the person, in hard copy or in an electronically readable format. The person should also provide on demand, the details of the files, passwords of the files and explanation for codes used (where necessary) for access to the files, along with a sample copy in print form of the information stored in the files.

How long should accounts and records be retained?

Every registered person is required to retain accounts and records for 6 years(72 months) 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 ’24.

Accounts and records to be maintained by specific persons

In addition to maintaining the accounts specified above, the following persons should maintain additional records specified below:

Persons whose turnover during the financial year exceeds Rs. 2 crores

A person whose turnover during the financial year exceeds Rs. 2 crores 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- 9C while filing the annual return in Form GSTR-9.

Agents

Persons operating as agents should maintain accounts showing:
a. Details of authorisation received by him from each Principal to receive or supply goods or services on behalf of the Principal
b. Description, value and quantity (wherever applicable) of goods or services received on behalf of every Principal
c. Description, value and quantity (wherever applicable) of goods or services supplied on behalf of every Principal
d. Details of accounts furnished to every Principal
e. Tax paid on receipt or supply of goods or services made on behalf of every Principal

Works contractors

A registered person executing a works contract should keep separate accounts for works contract showing:

      a. Names and addresses of persons on whose behalf the works contract is executed
      b. Description, value and quantity (wherever applicable) of goods or services received for execution of works contract
      c. Description, value and quantity (wherever applicable) of goods or services utilized in execution of works contract
      d. Details of payment received in respect of each works contract.
      e. Names and addresses of suppliers from whom he has received goods or services

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 particulars relating to dispatch, movement, receipt and disposal of the goods.

Transporters

A goods transportation agency, whether registered or unregistered, should maintain records of the goods transported, delivered and stored in transit, along with the GSTIN of the registered consigner and consignee for each of its branches

Carrier or clearing and forwarding agents

A person operating as a carrier or clearing and forwarding agent for delivery or dispatch of goods on behalf of a registered person should maintain records of goods handled on behalf of the registered person.

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Author: Anisha K Jose

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