GST Compliance Rating

The GST Act 2017 has introduced “Compliance rating” and every assesse will be rated with a score. The score will be based on his record of compliance with the provisions of the GST Act.

Compliance rating scores would be determined based on certain factors such as regular payment of taxes, timely E-filing of GST returns, matching of transactions of outward and inward supplies, accurate reconciliations etc.

A taxable person with higher rating will enjoy certain privileges while a lower rating may invite scrutiny and constant monitoring. The chances for scrutiny assessment will arise and dealers with low compliance rating or rating lower than prescribed limit will be blacklisted.

The GST Compliance rating scores will be updated on periodical basis. Also, the information would be placed on public domain. Dealers having low compliance rating scores may attract black listing by their customers. Short comings like continuous default for three months in ITC which has been reversed, continuous default in filing returns for three months, continuous short reporting on sales beyond prescribed limit for a period of six months, etc., may trigger unwarranted dip in reputation and credibility of the person involved.

Since the scores of every taxable person would be made available on public domain, businesses or dealers can suit themselves to prefer dealers with higher rating over low rated dealers. Dealing with low rated dealers might prove disadvantageous as it would cause loss of input credit from purchases with such dealers.

Black listed dealers wouldn’t declare details of outward supplies, and as a consequence of non-filing of return of outward supplies, recipients will not be able to take credit. The list of black listed vendors would be available on the website and purchase department should be alert while purchasing from such dealers.

On the other hand, better ranked dealers and vendors would enjoy trust of tax authorities and less chances of scrutiny. Also, there wouldn’t be locking up of otherwise allowable input credit and they would attract more businesses as their rating would make them a better choice over the rest. A good rating also adds to good governance aspects of organization thereby enhancing their reputation.

A Good GST rating will install greater confidence in all the stake holders of the business entity. Lenders and creditors will have a positive outlook. Employees of such companies will be proud to be part of such an organization.  Investors and stock market would react positively if the score is good and above all not just tax departments but more and more governmental agencies will look up to these kinds of businesses with higher rating. Over all this is one of the ways to become a respectable corporate citizen.

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