GST compliance rating

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

  • Every registered person may be assigned a Compliance Rating Score by the Government;
  • Such score will be assigned based on his record of compliance with the provisions of the GST Act;
  • Such score will be determined based on specific parameters;
  • Compliance Rating Score may be updated at periodic intervals;
  • Such score may be intimated to the registered person and may also be placed in the public domain.

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

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

  • Too boost the registered person to carry out various GST compliances on a timely basis;
  • Too reward the registered person who has accurately adopted the compliance provisions under GST;
  • Too encourage the non-compliant registered person to duly comply with the GST law and increase the Compliance Rating Score resultantly boosting their business;
  • Too enable trust-building between the sellers and buyers for ease of carrying on their business;
  • Too easily figure-out the registered person on which the GST department needs to focus more on; etc.

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

  • Timely and accurate payment of taxes;
  • Timely (monthly/ quarterly/ annual) filing of all the applicable GST returns;
  • Timely reconciliations of various data;
  • Correct availment, utilization and disclosure of input tax credit;
  • Compliance with all the applicable time limits prescribed under GST law;
  • Co-operation with the GST department during any type of inquiry, investigation, audit etc.

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What are the benefits of GST Compliance Rating Score

GST compliance rating benefits

Various benefits attached to the Compliance Rating Score are briefly tabulated hereunder

Particulars

Details

Common benefits attached to the Compliance Rating Score

  • Easy and immediate granting of refund claims;
  • Reduce the possibility of the departmental audit under GST ;
  • Enhancement in trust of the GST authorities;
  • Buyers can avail of immediate and uninterrupted input tax credit;
  • Attracting more business by building trust amongst the buyers;
  • Building up the reputation; etc.

Specific benefits attached to the Compliance Rating Score from the view point of the seller

  • Seller with higher Compliance Rating Score will be preferred more by the buyers;
  • As the Compliance Rating Score will be published in the public domain, any unknown buyer can easily put up their trust in the sellers having a higher GST Compliance Rating Score.

Specific benefits attached to the Compliance Rating Score from the view point of the buyer

  • Buyers can easily look for a seller having a higher  Compliance Rating Score which will enable them to avail of immediate input tax credit.

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GST Compliance Rating Score | Drawbacks

GST compliance rating 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.


CA Poonam Gandhi

About the author

Poonam Gandhi is a Chartered Accountant and a Lawyer. She is a Professional Freelance Content Writer/ Editor and an Educator.

She masters in creating result-oriented as well as Search Engine Oriented Content. Currently, she is associated with some of the topmost leading sites of India.

She holds more than 3 years of experience in the content field. Before entering the content writing field, she possessed a wide practice experience of more than 9 years, specifically, in the field of Indirect Taxation.

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