With the major tax reform introduced in India in the form of Goods and Services Tax (GST), the concept of compliance rating was also introduced. Interestingly, there was no such concept of GST compliance rating under any of the taxation laws in India. '
This concept is for the very first time being experimented under GST law. As the name itself says, Compliance Rating means ratings/ score assigned to every registered person based on their compliance accuracy with the provisions of the GST Act.
The present article briefly covers and explains the statutory provisions attached to the Compliance Rating; the objective behind the introduction of the GST Compliance Rating Score; benefits and drawbacks attached to the Compliance Rating Score.
GST Compliance Rating | Statutory provisions
The concept of GST Compliance Rating is covered under the GST law. Accordingly, provisions of section 149 of the Central Goods and Services Tax Act, 2017 deal with the same. The provision simply states as under
Thus, from above it is amply clear that Compliance Rating Score will be assigned to each and every registered person and such score will be intimated on the public domain.
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GST Compliance Rating Score and objective
GST Compliance Rating Score will be made available for every registered person irrespective of their nature, turnover, type of business, etc. The main objectives behind the introduction of the Compliance Rating Score are
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GST Compliance Rating Score Parameters
Before going into details, it is important to note here that the parameters determining Compliance Rating Score are yet to be notified by the Government. However, conceptually, the basis of the GST Compliance Rating Score will be
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What are the benefits of GST Compliance Rating Score
Various benefits attached to the Compliance Rating Score are briefly tabulated hereunder
Particulars | Details |
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Common benefits attached to the Compliance Rating Score |
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Specific benefits attached to the Compliance Rating Score from the view point of the seller |
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Specific benefits attached to the Compliance Rating Score from the view point of the buyer |
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GST Compliance Rating Score | Drawbacks
After going through the benefits, it is also important to go through the likely drawbacks attached with the GST Compliance Rating Score. Some of the likely drawbacks are highlighted hereunder
- As seen above Compliance Rating Score is likely to affect the business of registered person and hence it is obvious that every registered person will have to try hard on getting a good score. Accordingly, the same is likely to effectively increase the compliance cost specifically for the small and medium scale businesses.
- In case, the registered person doesn’t give importance to GST Compliance Rating Score and the rating of the person goes down. In spite of the registered person being genuine, the low GST Compliance Rating Score is likely to affect his business inversely.
- GST being a new levy and also frequent changes are being introduced, there are more chances of the registered person making errors/ omission/ delay in carrying out the compliance and the same will directly affect the GST Compliance Rating Score of the registered person.
Synopsis
GST Compliance Rating Score is a new concept introduced under GST. Some of the highlighted summing-up points are
- Likely parameters deciding GST Compliance Rating Score of the registered person
- Timely filing of returns and payment of tax;
- Timely reconciling the data;
- Correct availment and utilization of input tax credit;
- Co-operation with the GST department.
- Likely benefits of GST Compliance Rating Score
- Easy refund claim;
- Attracting more business;
- Increase in reputation;
- Uninterrupted availment of input tax credit;
- Auto-developed trust between GST authority.
On top of all the above points, it is important to note that the parameters, benefits, etc. under the GST Compliance Rating Score are still not notified by the Government.