GST Compliance Rating – Comprehensive Guide
GST compliance rating or GST rating is a score determined by the GST tax department for every person registered under GST. GST compliance rating would be based on the compliance record of the business with respect to GST. Hence, GST compliance rating would be similar to the CIBIL score used for rating an individual’s credit worthiness.
What is GST Compliance Rating?
GST compliance rating is a score determined by the GST Department for all GST taxpayers, based on their record of compliance. GST compliance rating score would be updated for all taxpayers periodically and the score would be published in the public domain.
What factors affect GST rating?
GST rating score is calculated purely based on the taxpayer’s compliance under GST rules and regulations. Hence, the following aspects relating to GST compliance would have an impact on the GST rating.
- Timely filing of GST Returns.
- Timely payment of GST tax, penalty and other dues.
- Cooperation with requests of GST Authorities.
- Filing of other documents as required under GST rules and regulations.
- History of promoters in maintaining compliance for related entities.
In addition to timely GST compliance, GST audit or inspection could be ordered by GST authorities from time to time to check various aspects of compliance under GST. Thus, ensuring that the business issues proper tax invoice, makes correct determination of taxes payable, reconciliation of return and various other factors could impact GST compliance rating.
What are the uses for GST rating?
Transparency with respect to tax compliance will immensely benefit the business, its employees, customer, creditors, other stakeholders and the Government. Further, by disclosing the compliance history of a person registered under GST in a simple to understand score, trade creditors and financial institutions will be able to quickly determine the creditworthiness of a company.
The GST rating mechanism will also serve as a feedback to the stakeholders of the company like promoters, investors and directors on steps to be taken to improve compliance.
What details will be published in GST compliance rating?
GST compliance rating is expected to be a simple score. According to the GST Act, no information of any individual return or its part can be published in a matter that identifies a particular person without previous written consent of the particular person. Further, the Act also probit third-parties from accessing any information or any individual GST return. Hence, GST compliance rating would not have details like:
- Name of suppliers
- Name of customers
- Amount of turnover
- Products or services supplied
- Address of supply
How will GST rating impact my business?
GST compliance rating is a game-changer and would have a pervasive effect on the company ability to operate successfully, raise credit, hire employees and win-over customer. Currently, CIBIL score for all individuals and entities can be accessed only by Banks and Financial Institutions for the purposes of lending credit. CIBIL scores are not published in the public domain.
However, GST compliance ratings would be published in public domain. As the rating would be readily available in the public domain, more persons including customer, employees, creditors, vendors and investors would access GST rating before or during the course of doing business. Hence, a low GST rating could signification impact a business in various areas like hiring, sales, raising credit and more.
Thus, it is most important for all businesses to be aware of the factors impacting GST rating, check GST compliance rating for their business periodically and ensure that steps are taken to promptly comply with all GST rules and regulations.
How to improve GST rating?
GST rating is tied to GST compliance history of the taxpayer. Hence, if your GST rating is low, you would be able to improve your GST rating by beginning to file your GST returns on time and making timely GST payments.
You can use a GST Accounting software like LEDGERS with return filing features, compliance alerts and auto-reconciliation facilities to improve GST rating.
Where can I find GST compliance rating?
GST compliance ratings for all persons registered under GST would be placed in the public domain. Hence, registered and unregistered person under GST would be able to readily access this information.
The complete rules for GST compliance rating and procedure for accessing GST ratings have not yet been notified by the GST Department. However, GST ratings are expected to be live before end of 2017 and available at gst.gov.in website.
The post GST Compliance Rating – Comprehensive Guide appeared first on IndiaFilings.com | Learning Center.