GST Update on Draft Rules on Accounts and Record

There has been a new Draft Rule put in public domain lately which relates to Accounts and Records. While the taxpayers would be required to maintain all account and records electronically, certain requirements in the rules could be burdensome, especially for smaller taxpayers. Hence we put forth the said Rule under a “feasibility test” as under:
1. Every registered person is required to keep the books of account not only at the principal place of business but also at every related place(s) of business mentioned in his certificate of registration. Example, If an assessee has its 6 other units in a state same as its principal place of business then, he will be required to keep at each of the 7 places records of its own and rest 6 places also. This requirement isn’t any fruitful; it is a mere exercise to increase detailed paperwork of the assessee. If the requirement of keeping books of accounts in digital form is there then it is feasible to do so. If it extends to keeping of all records including invoices etc. in hard copy then it is very impractical.

2. The Draft Rules require maintenance of trail of each deleted or edited entry in electronic records. While this is supported by major enterprise resource planning (ERP) software, complying with this may be a major challenge for small enterprises which may be using readily-available, basic accounting software. It was asked by a senior Chartered Accountant in a seminar that the above provision is applicable for GST stock records or even for accounting enteries also.

3. Every registered person manufacturing goods shall maintain monthly production accounts, showing the quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products thereof. The aim of the GST law was to curb Excise and Service tax practices and bring them under a common umbrella. Bringing such Rules that keep the assessee occupied in the same old documentary procedures isn’t in spirit of new law as the record-keeping requirements continue to be based on lines of Excise law.

4. The Rule also provides that accounts or records shall be maintained separately for each activity, including manufacturing, trading or provision of service. Therefore, the classification of these activities will continue even in the new regime even though it is not relevant for the concept of supply which underlines GST

5. Every registered person supplying services shall maintain the accounts showing the quantitative details of goods used in the provision of each service, details of input services utilized and the services supplied. For example, For a Chartered Accountant services in form of internet facility, telecommunication facility etc. are the basic input services. Now, the question arises here is that how can he maintain one to one record of availing these services with providing final consultancy services to the client.

6. Every registered person executing works contract shall be required to keep detailed records that too as a separate account for each works contract. Records like- the names and addresses of the persons on whose behalf the works contract is executed, description, value and quantity of goods or services received for the execution of works contract and utilized in it etc need to be maintained for each works contract. In the practical scenario the works contractors generally belong to a class that isn’t much educated and well versed with keeping and maintaining records. Keeping such detailed records might come as an unmanageable and costly affair for them.

7. Any person engaged in the business of transporting goods shall maintain records of goods transported, delivered and goods stored in transit by him and for each of his branches. Also, the rules shower upon responsibility too every owner or operator of a warehouse or godown to maintain books of accounts, with respect to the period for which particular goods remain in the warehouse, including the particulars relating to dispatch, movement, receipt, and disposal of such goods. The plight of the small transporters and godown owners with a turnover less than Rs. 20 lacs is that it will not be feasible for them to maintain so many records of every movement attached with the goods.
The Draft Rule as a whole seems to fail the feasibility test and thus its reframing needs to be considered. In the opinion of authors of these updates is that it is impossible to maintain such detailed records not only for small scale enterprises but also very difficult for big business house. The number of records to be maintained under Current system of Central Excise and service tax seems to be very simple after seeing these draft rules.

You can visit us at www.capradeepjain.com or at our facebook page athttps://www.facebook.com/GSTTODAYBYPRADEEPJAIN/

Comments

GST Update on Draft Rules on Accounts and Record

Post a Comment

Query