Accounts & Records in GST

What is Accounting.Purpose of maintaining Accounts.Accounts & Records in GST.

1. Accounts & Records

2. Presentation Plan What is Accounting Purpose of maintaining Accounts Accounts & Records in GST Audit Special Audit Inspection, Search, Seizure & Arrest Other related matters

3. What is accounting....... It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at large companies.

4. Accounting helps in decision making, planning, and controlling processes It helps in recording, classifying and finally summarizing the transactions in a business . Purpose of maintaining….books of accounts…

5. Financial statements and accounts are used to represent the organization to the stakeholders such as debtors, creditors, government, and investors, customers and employees Proper accounting systems will take care of working capital and any other cash requirements within the business organization. Purpose of maintaining….books of accounts…

6. In order to get any loan from the financial institution, ONE must be able to present their financial status in acceptable order Any economic or any decision regarding the business organization is made depending on the financial statement of the organization Purpose of maintaining….books of accounts…

7. under the Companies Act, 2013 …. Books should be maintained for a period of 8 years from the end of the relevant financial year . Sales and purchase of goods and service Assets and liabilities Item of cost ... All companies incorporated in India are required to mandatorily maintain book of accounts The book of accounts has to be maintained at the  Registered Office of a Company  Books of Accounts includes records maintained in respect of: Sum or money received and expended and matters in relation to which the receipt and expenditure take place

8. …under GST Assessment in GST is mainly focused on self- assessment In the Self- Asst system, the compliance verification is to be done through documentary checks rather than physical controls. This requires certain obligations to be cast on the taxpayer for keeping and maintaining accounts and records

9. Governing Legal Provisions...... CHAPTER VIII - ACCOUNTS AND RECORDS Sec.35 – Accounts and other records Sec. 36 – Period of retention of accounts

10. SEC.35 . (1) 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 —             ( a) production or manufacture of goods;           ( b) inward and outward supply of G or S or both;           ( c) stock of goods;           ( d) input tax credit availed;           ( e) output tax payable and paid; and           (f ) such other particulars as may be prescribed :

11. Proviso…. Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed.

12. Every owner or operator of warehouse or godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed. Sec. 35 (2)

13. 35(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified therein . 35  (4) Where the Commissioner considers that any class of taxable person is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed

14.   (5) Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountantand shall submit a copy of the audited annual accounts, the reconciliation statement

15. If not maintained..... 35(6), where the registered person fails to account for the goods or services or both in accordance with the provisions of sub-section (1), 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 or section 74, as the case may be, shall, mutatis mutandis, apply for determination of such tax.

16. Period for Retention of Accounts under GST 36. Every registered person required to keep and maintain books of account or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records :

17. Provided 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, 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 one year after final disposal of such appeal or revision or proceedings or investigation, or for the period specified above, whichever is later.

18. Period for Retention of Accounts under GST As per the GST Act, every registered taxable person must maintain the accounts books and records for at least 72 months (6 years). The period will be counted from the last date of filing of Annual Return for that year. The last date of filing the Annual return is 31st December of the following year. If the taxpayer is a part of any proceedings before any authority (First Appellate) or is under investigation then he must maintain the books for 1 year after the order of such proceedings/appeal has been passed. For example: For the year 2017-18, the due date of filing the annual return is 31.12.2018. The books & records of 2017-2018 must be maintained for 6 years, i.e., 31.12.2023

19. AUDIT CHAPTER XIII AUDIT SEC. 65 AUDIT BY TAX AUTHORITIES SEC66 SPECIAL AUDIT

20. DEFINITION... (13) “audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made there under or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made there under ;

21. TYPES OF AUDIT Audit by Department Special Audit :  Audit by Chartered Accountant or a Cost Accountant

22. Section 65 – Audit by Tax Authorities (1) The Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed. (2) The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office. (3) The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.

23. Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months. Explanation. ––For the purposes of this sub-section, the expression “commencement of audit” shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the registered person or the actual institution of audit at the place of business, whichever is later. (4) The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of the audit:

24. Action by the proper officer upon conclusion of the audit.... The proper officer shall, on conclusion of audit, within 30 days inform the taxable person about his findings, reasons for findings and the taxable person’s rights and obligations in respect of such findings. 

25. Action by the proper officer upon conclusion of the audit.... Where the audit conducted results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74.

26. Section 66 – Special Audit (1) If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue , is of the opinion that  direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner.  the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner ,  (2) The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified 

27. (4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder . Section 66 – Special Audit

28. Action by the proper officer.... (6) Where the special audit , results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74.

29. Inspection , Search, Seizure & Arrest)

30. Section 67 – Power of Inspection Search and Seizure ( 1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that–– (a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or

31. (b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. Inspection , Search, Seizure & Arrest)

32. (2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Inspection , Search, Seizure & Arrest)

33. Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: 3) The documents, books or things referred to in sub-section (2) or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder , shall be returned to such person within a period not exceeding thirty days of the issue of the said notice. Inspection , Search, Seizure & Arrest)

34. (4) The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah , electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah , electronic devices, box or receptacle is denied. (5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. Inspection , Search, Seizure & Arrest)

35. The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the word “Commissioner” were substituted.

36. Section 68 – Inspection of Goods in Movement  (1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed. ) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.

37. Section 69 – Power to Arrest (1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause ( i ) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person. Section 132 – Punishment for Certain Offen ces supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder , with the intention to evade tax ;  issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;

38. OTHERS

39. Account/Records Information Required By Whom? Register of Goods Produced Account should contain detail of goods manufactured in a factory or production house Every assessee carrying out manufacturing activity Purchase Register All the purchases made within a tax period for manufacturing of goods or provision of services All Assessee Sales Register Account of all the sales made within a tax period must be maintained All Assessee Stock Register This register should contain a correct stock of inventory available at any given point of time All Assessee

40. Account/Records Information Required By Whom? Input Tax Credit Availed This register should maintain the details of Input Tax Credit availed for a given tax period All Assessee Output Tax Liability  This register should maintain the details of GST liability outstanding to be adjusted against input credit or paid out directly All Assessee Output Tax Paid This register should maintain the details of GST paid for a particular tax period All Assessee Other Records Specified Government can further specify by way of a notification, additional records and accounts to be maintained Specific Businesses as notified by the government

41. Electronic Cash Ledger-  This ledger will serve as an electronic wallet.   The taxpayer will have to deposit money into his cash ledger (add money to the wallet). The money will be utilized to make the payment. Electronic Credit Ledger- The input tax credit on purchases will be reflected here under three categories i.e IGST, CGST & SGST. The taxpayer will be able to utilize the balance shown in this account only for payment of tax (not for interest, penalty etc.)

42. E-Liability Ledger:  This ledger will show the total tax liability of a taxpayer after netting off for the particular month. This ledger will be auto-populated.

43. Under Income Tax Act If the sale/turnover/gross receipts from the business or profession is more than Rs. 25,00,000 or the income from business or profession is more than Rs. 2,50,000 in any of the 3 preceding years, then books of accounts will be compulsorily maintained. For how long should the books be maintained? Books should be maintained for a period of 6 years from the end of the relevant year. Books of accounts as per Rule 6F Cash Book Journal Ledgers Copies of bills or receipts Daily cash register with details of patients, services rendered, fees received and date of receipt  (persons carrying on medical profession) Details of stock of drugs, medicines, and other consumables used  (persons carrying on medical profession)

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