GST Compliance Ratings

Under GST law there is a concept of GST Compliance Rating. As per this concept every registered person irrespective of its nature or size or turnover shall be assigned a GST compliance rating based on his record of compliance with the provisions of the GST Act. In simple words, the GST department would provide a GST compliance rating based on the timely compliances of provisions of GST law. In this article we are going to explore in detail about such concept of GST compliance rating.

Before going in to detailed discussion, let’s discuss about the provisions contained in CGST Act in respect of GST compliance rating. Section 149 of CGST Act 2017 states that every registered person may be assigned a goods and services tax compliance rating score by the Government based on his record of compliance with the provisions of this Act. The goods and services tax compliance rating score may be determined on the basis of such parameters as may be prescribed.
The goods and services tax compliance rating score may be updated at periodic intervals and intimated to the registered person and also placed in the public domain in such manner as may be prescribed.

Similar provisions on GST rating shall also be applicable to IGST Act, 2017 as Section 20 of IGST states that the provisions of CGST Act, 2017 shall apply mutatis mutandis to IGST Act.

The GST Rating will be based on certain criteria which are yet to be prescribed. However, the following factors can play a key role in deciding compliance ratings:
(i) Timely payment of taxes
(ii) Timely e-filing of monthly/quarterly returns and annual return.
(iii) Matching of transactions shown in returns like GSTR-1 & GSTR-3B.
(iv) Timely preparations of reconciliations
(v) Compliance with various other time limits under GST
(vi) Correct utilisation of input tax credit
(vii) Correct deduction of TDS/TCS, wherever applicable
(viii) Cooperating with the GST authorities

Impact of such GST compliance rating:
1. Impact on the recipient :
As the recipient has to claim input tax credit in respect of  the goods or services procured from the supplier. Hence the recipient will always prefer only those suppliers who have more compliance ratings from the Government. So that the input tax credit availed on the procurement made from such suppliers can not be questioned.

2. Impact on the supplier’s business:
The suppliers having GST compliance rating will be able to attract more customers. Hence the GST compliance rating will bring a healthy competition between businesses. A prospective recipient will always try know about the GST compliance ratings of suppliers before entering deals.

How to check GST Compliance Rating?
The GST number of the registered person will be used to track the GST compliance rating. Currently on GST portal when we search the taxpayer by using his GST number on the portal, the following details are shown: Legal Name of Business, Trade Name, Effective Date of registration, Constitution of Business, GSTIN / UIN Status, Taxpayer Type Administrative Office, Principal Place of Business, Whether Aadhaar Authenticated? Whether e-KYC Verified? Additional Trade Name etc, the option of compliance rating is not shown. But we login to our GST portal and then visit in my profile option available on GST portal, then we can find the option of compliance rating which is currently showing NA for every taxpayers registered in Haryana, Delhi and many other states. Which means that currently such GST compliance rating is not done by the Government in respect of such states.

However, when we visit the GST site of Kerala state which is “https://keralataxes.gov.in” an option shows which is “Check Taxpayer Rating” and when we click on this option and enter the GST number of taxpayer registered in Kerala then we can check the rating allotted to such person.

Steps to maintain good GST compliance rating:
(i) File your GSTR-1 and GSTR-3B on time and pay all tax dues.
(ii) Submit your annual return.
(iii) Claim ITC as per the conditions specified under section 16 & 17 of CGST Act 2017.
(iv) Cooperating with the GST authorities

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.