GST Compliance rating refers to the score allotted by the Government to all registered users and is public information. This based on their record of compliance with the GST rules and regulations. This has no relation to the nature, size, or turnover of the business.    

GST Compliance rating is being introduced to incentivize users to be fully compliant with the GST laws. Indirectly, this will result in timely uploading of Invoices, which in turn will prevent the delay of credit to bona fide users.

Parameters on which compliance rating will be calculated:

1.Timely uploading of invoices

2.Timely filing of returns

3.Timely payment of taxes

4.Timely reconciliations

5.Complying with various other time limits

6.Collection of GST but non-remittance of the same within the due date

7.Filing of audit report

8.Availability and utilization of credit in accordance with provisions of the Act

9.Transfer of credit in accordance with provisions of the Act

10.Remittance of TDS within due date by persons prescribed u/s 51

11.Remittance of TCS within due date by persons prescribed u/s 52

12.Pending disputes with the department

13.Arrears of GST revenue

14.Seizure of goods, due to contravention of the provisions of the Act

15.Maintenance of accounts and records in accordance with provisions of the Act

What are the benefits that you can enjoy?

Some of the benefits that compliant vendors may be able to enjoy include:

1.Fast Tracking of Refunds – A rating of 5 or above on a scale of 10 will be provided immediate tax refunds to a business.

Your compliance rating is directly proportional to your immediate provisional refund. So, if your compliance rating is 8 out of 10, then you will receive an immediate provisional refund of 80%.

Further, a minimum score of 5 out of 10 is required to claim refunds at all.

2. Buyers can get input tax credit immediately – This, in turn, will ensure better reputation among clients and vendors. Buyers will look for sellers with a higher rating which will ensure they can avail input tax credit faster.

3.Magnet for more businesses – A firm with higher compliance rating is likely to attract more business deals, as the clients can maintain their compliance rating by doing business with them.

4.Chances of an audit by the tax authorities will get reduced – Compliant businesses are likely to undergo fewer external audits compared to their non-compliant counterparts.

5. A low GST rating will attract higher scrutiny from the department – A good compliance rating implies that the organization is punctual in filing their returns, thereby making it easy for buyers to claim timely input tax credit on their purchases.

The compliance rating score will be updated periodically and will be intimated to the taxpayer and also be available publicly. This system is likely to give better competitive grounds to compliant users, thereby structuring and systematizing the compliance environment.

 

 

We have launched Single Platform on GST Compliances In India, assisting in 4 areas – 1) Migration, 2) GST Compliance, 3) Training and 4) Transition & Implementation. Click this link for any assistance

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