All About Accounts and Records Under GST | Taxation for CA Intermediate PDF Download

Accounts and Other Records

Every registered individual is mandated to maintain all records at their primary business location.

Who Needs to Maintain Accounts under GST?

The following individuals bear the responsibility to uphold specific records:

• The proprietor
• The operator of a warehouse, godown, or any storage facility
• Every transporter

• If a registered person's turnover surpasses the specified limit (2 crore) within a financial year, they must have their accounts audited by a chartered accountant or a cost accountant.

Which Records are Essential under GST?

All registered persons are required to maintain records of:

• Production or Manufacture of Goods: Refers to the process of creating or making products.
• Inward and Outward Supply of Goods or Services: Includes receiving goods or services into the business as well as supplying goods or services to customers.
• Stock of Goods: Refers to the inventory of goods available for sale or use in the business.
• Input Tax Credit Availed: Amount of tax credit that a business can claim on inputs used in the production of goods or services.
• Output Tax Payable and Paid: Amount of tax that a business is required to pay on the outward supply of goods or services.
• Other Particulars as May be Prescribed: Additional details or requirements that may be specified by the relevant authorities.

What are the Accounts Which Must be Maintained Under GST?

Businesses under GST are required to maintain specific accounts in addition to regular accounts like purchase, sales, and stock. Examples include:

• Input CGST Account
• Output CGST Account
• Input SGST Account
• Output SGST Account
• Input IGST Account
• Output IGST Account
• Electronic Cash Ledger (to be maintained on the Government GST portal to pay GST)

Accounting Entries under GST

• Transition Challenges under GST: Initially, there were challenges during the transition to GST. Despite this, the implementation of GST is expected to bring clarity to various aspects of business operations, especially in accounting and bookkeeping.
• Simplified Record-Keeping: Although it may seem like there are more accounts to manage under GST, understanding the accounting entries reveals that it is actually simpler for record-keeping purposes. A significant benefit for traders is the ability to offset input tax against output tax on sales.
• Accounting Treatment of Transactions: Discussions cover the accounting treatment for different transactions under GST. This includes guidance on recording and passing entries for interstate sales of goods, as well as recording the utilization of input tax credits.

Electronic Cash and Credit Ledger

Electronic Cash Ledger

• The Electronic Cash Ledger acts like a digital wallet where a taxpayer must deposit funds. These funds are then used to make payments.
  For example, if a business owner wants to pay their monthly tax obligations, they would transfer the required amount from their bank account to the Electronic Cash Ledger. This balance is then used solely for tax payments.

Electronic Credit Ledger

• The Electronic Credit Ledger records the input tax credit on purchases made by the taxpayer. This credit is categorized under IGST, CGST, and SGST. The balance in this ledger can only be used for tax payment purposes and not for penalties or interest payments.
  For instance, when a business buys goods or services, the taxes paid on those purchases are recorded in the Electronic Credit Ledger. This credit can then be used to offset future tax liabilities.

E-Liability Ledger

• The E-Liability Ledger displays the total tax liability of a taxpayer after accounting for various adjustments for a specific month. This ledger is automatically populated.
  For instance, if a company has tax liabilities of $1000 for the month, but they are eligible for a tax credit of $200, the E-Liability Ledger will show a net tax liability of $800.

Period for Retention of Accounts under GST

• Registered taxable persons are required to maintain accounting records for a minimum of 72 months (6 years) as mandated by the GST Act.
• The retention period commences from the final date of filing the Annual Return for that specific year.
• The deadline for filing the Annual return typically falls on the 31st of December of the subsequent year.
• For instance, if the Annual return for the fiscal year 2017-2018 was due on 31.12.2018, the associated records must be retained until 31.12.2023.
• If a taxpayer is engaged in legal proceedings or investigations, the records must be preserved for an additional year post the conclusion of such proceedings or appeals.

Consequences of Inadequate Record-Keeping

If a taxpayer neglects to maintain proper records regarding goods/services, the designated officer will consider these unrecorded goods/services as if they were supplied by the taxpayer. Subsequently, the officer will assess the tax liability associated with these unaccounted goods.