GST COMPLIANCE RATINGS TO IMPROVE TAX MANAGEMENT
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 29-4-2017
GST law provides for Goods and Services Tax Compliance Rating which is a new concept in India. Presently, there is no system of compliance rating under any tax laws in India. GST compliance rating is a concept which will be experimented as a legal provision for the first time in our country. Accordingly, every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of the GST Act. Every taxable person irrespective of its nature or size or turnover shall be assigned a GST compliance rating.
As a governance issue, it is a fact that taxes and their compliances are increasingly being discussed at board level.
Statutory Provisions
Section 149 of the Central Goods and Services Tax Act, 2017 contains provision in respect of GST compliance rating as under:
"(1) Every registered person may
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nce rating.
Accordingly, it can be said that :
* GST compliance rating is a new concept in GST. All the taxable persons will be assigned rating scores on the basis of his record of compliance of provisions of the GST law.
* The various compliance parameters on which the performance will be evaluated would be prescribed.
* The compliance rating scores would be updated on periodical basis and would be intimated to the taxable person and also the information of which would be put in public domain.
Salient features of Compliance Rating
* Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of the GST Act irrespective of its nature or size or turnover.
* Compliance rating scores could be based on
* promptness of paying taxes,
* timely e-filing of returns,
* matching of transactions,
* transparent reconciliations,
* adherence to various time limits,
* cooperation in dealing with tax department etc.
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evant to determine the eligibility of input tax credit in respect of inward supplies, selection for scrutiny and other administrative / monitoring purposes. The rating would be based on tax payer's record of compliance with the provisions of CGST, IGST and SGST. The details of parameters and methodology for rating would be as prescribed.
The compliance rating score will be updated periodically and will be intimated as follows:
* to the taxable person
* will be placed in the public domain
In terms of sub-section (3) of section 149 of the CGST Act, 2017, the GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed. The parameters and criteria as well as methodology shall be prescribed by way of regulations / guidelines.
Since GST shall operate on electronic platform, GSTN may be entrusted with the responsibility of determining rating scores based on parameters, its perio
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ld also add to efficiency of transactions, timely input tax credit and lessee hurdles in reconciliations. It would also add to organization's reputation. Large organizations and rated or listed companies including PSU's may prefer and choose to deal with good rated suppliers / vendors / enterprises.
The GST compliance sores will primarily be based on compliances with law and rules. These could cover, inter alia, the following:
* Filing of appeals an monthly basis
* Matching of transactions, i.e., no mismatch of invoices
* Filing of regular and annual returns timely and correctly
* Timely payment of proper taxes
* Correct utilization of input tax credit and its disclosure
* Correct deduction of TDS / TCS, whereable applicable
* Findings in scrutiny of returns / audit findings
* Refund claims etc.
These ratings and expected to be measured at periodic of tax payers and their dissemination on public platform.
Impact of GST Ratings
GST ratings would allow business ente
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