ACCOUNT AND RECORDS –SECTION 35 AND 36 OF THE CGST ACT 2017

1. ACCOUNT AND RECORDS –SECTION 35 AND 36 OF THE CGST ACT 2017 Complied by Ca Avinash Lalwani for education purpose only-by Ca Avinash Lalwani

2. Section 35 of the GST Act makes provisions regarding maintenance of accounts and records and • & • Section 36 of the GST Act period of retention of accounts. for education purpose only-by Ca Avinash Lalwani

3. INTRODUCTION • With the introduction of GST from 1st July 2017, India has moved towards a single indirect tax Regime for goods & services for the entire country with uniform law. • In view of the majority of Taxes getting subsumed, there are numerous impacts on various functional areas of a business. • From accounting perspective, entities have to re-align their accounting systems in accordance With the provisions of the GST Law. • The GST law which is considered as a progressive tax reform for the country is not limited to tax structure. • It also encompasses the entire accounting and Financial reporting structure. for education purpose only-by Ca Avinash Lalwani

4. OBJECT :- The main objective of the accounts record is to ensure that the person is able to compute the tax liability properly and make payment of the same • FORMAT: These section do not provide any specific format in which records are to be maintained. However, it generally provides that the records indication true and correct account of the business activities of a registered person shall be maintained. • Inventory accounting to be strengthened so that there is no issue in taking input tax credit which is based on receipt of goods or services only. • Records are to be kept at each registered place of business be it electronically or in hard format • Maintenance of running accounts and payment settlement to be looked at to ensure the adjustment of payment at invoice level • Reconciliation:-Reconciliaiton between Gst Return and Audited Accounts for education purpose only-by Ca Avinash Lalwani

5. BARE ACT :-ACCOUNTS AND RECORDS35. Accounts and other records(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of—(a) production or manufacture of goods;(b) inward and outward supply of goods or services or both;(c) stock of goods; for education purpose only-by Ca Avinash Lalwani

6. (d) input tax credit availed;(e) output tax payable and paid; and(f) such other particulars as may be prescribed:Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business:Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed. for education purpose only-by Ca Avinash Lalwani

7. The cgst act 2(85) “place of business” includes–– (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or (b) a place where a taxable person maintains his books of account; or(c) a place where a taxable person is engaged in business through an agent, by whatever name called; for education purpose only-by Ca Avinash Lalwani

8. (2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not,shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed.. for education purpose only-by Ca Avinash Lalwani

9. 3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified therein for education purpose only-by Ca Avinash Lalwani

10. (4) Where the Commissioner considers that any class of taxable persons is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed for education purpose only-by Ca Avinash Lalwani

11. (5) Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner asmay be prescribed. (6) Subject to the provisions of clause (h) of sub-section (5) of section 17, where the registered person fails to account for the goods or services or both in accordance with the provisions of sub-section (1), the proper officer shall determine the amount of tax payable on the goods or services or both that are not accounted for, as if such goods or services or both had been supplied by such person and the provisions of section 73 or section 74, as the case may be, shall, mutatis mutandis, apply for determination of suchtax. for education purpose only-by Ca Avinash Lalwani

12. 36. Period of retention of accounts Every registered person required to keep and maintain books of account or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy two months from the due date of furnishing of annual return for the year pertaining to such accounts and records: Provided that a registered person, who is a party to an appeal or revision or any other proceedings before any Appellate Authority or Revisional Authority or Appellate Tribunal or court, whether filed by him or by the Commissioner, or is under investigation for an offence under Chapter XIX, shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a period of one year after final disposal of such appeal or revision orproceedings or investigation, or for the period specified above, whichever is later. for education purpose only-by Ca Avinash Lalwani

13. Points for discussion - section 35ACCOUNTS AND RECORDSDISCUSSION POINTS:-a) Nature of records to be maintainedb) Owner or operator of warehouse or godownC) Maintenance of additional accountsD) Power of Commissioners/ Chief CommissionerE) Auditing of Accounts for education purpose only-by Ca Avinash Lalwani

14. SECTION 35(1)a) Nature of records to be maintained principal place of business,Every person intending to obtain registration is required to make application to the Proper Officer for obtaining registration. He shall declare the principle place of business and additional place of business. The address of the principle place of business is shown in the certificate of registration give in the form GST-REG-06. The records shall be available at that place. for education purpose only-by Ca Avinash Lalwani

15. SECTION 35(1) each place of businessThe registered person shall ensure that the accounts relating to transactions conducted at such additional place of business shall be maintained at that additional place of business. For example, say a Company “Orange Ltd “ has a factory in Nasik and godown in Sholapur. The godown at Sholapur has declared the additional place of business in the registration. The stock records that is receipt of finished goods and dispatches shall be maintained at the godown at Sholapur.electronic form There is no need to obtain any permission from any authority for the purpose of maintaining the record in electronic form. now a days persons are maintaining the entire record in ERP’s , SAP, tally, foxpro etc. for education purpose only-by Ca Avinash Lalwani

16. OBJECT :- The main objective of the record is to ensure that the person is able to compute the tax liability properly and make payment of the same SECTION 35(1) for education purpose only-by Ca Avinash Lalwani

17. SECTION 35(1) EXAMPLE FOR NATURE OF RECORDS(a) production or manufacture of goods;PRODUTION CHART/BATCH CHART/JOB CHART/BILL OF MATERIALPRODUCTION SLIP for education purpose only-by Ca Avinash Lalwani

18. (b) inward supply of goods or services or both;PO-PURCHASE ORDER/GRN-GOODS RECEIVED NOTE/PURCHASE INVOICE OF THE SUPPLIER/BANK BOOKand outward supply of goods or services or both;ORDER-SALES/OUTWARD CHALLAN/FRIGHT RECEIPT/SALES INVOICE/BANK BOOKDEBIT AND CREDIT NOTE for education purpose only-by Ca Avinash Lalwani

19. (c) stock of goodsGRN-GOODS RECEIVED NOTE,GOODS ISSUED SLIP,CHALLAN,INVOICE OF THE SUPPLIER,OTHER INVENTORY RECORDS for education purpose only-by Ca Avinash Lalwani

20. (d) input tax credit availed;PURCHASE REGISTER,ACCOUNTING LEDGER,BANK BOOK AND CASH BOOK,JOURNAL for education purpose only-by Ca Avinash Lalwani

21. (e) output tax payable and paid; andSALES REGISTER ACCOUNTING LEDGER,BANK BOOK AND CASH BOOK,JOURNAL, for education purpose only-by Ca Avinash Lalwani

22. (f) such other particulars as may be prescribed:CHEQUE BOOK ,PAYING SLIPNote:-depending on the nature of goods or services supplied,the records may be maintained. For example,the company engaged in banking/Insurance/Labour may ask customers to fill specific format.some times on the basis of information may be basis for determining the tax liability. for education purpose only-by Ca Avinash Lalwani

23. SECTION 35 (2)(b) Owner or operator of warehouse or godownUnregistered personif the owner or operator and transporter is not a registered person, Section 35(2) of GST Act creates an obligation on the to maintain the records as mentioned above. In addition to it, the owner or operator and transporter shall maintain the records of dispatches like lorry receipt number, vehicle number, number of packages, etc. for education purpose only-by Ca Avinash Lalwani

24. SECTION 35 (3)(c) Maintenance of additional accountsProper determination of taxThe basic purpose for maintenance of records is to ensure that the tax liability is properly computed. If the Commissioner is of the opinion that interest or revenue requires certain classes of assesse to maintain certain records, he may notify the issuance of additional records for the purpose of insuring proper determination of tax paymentTo ensure uniformity all over India, such notification will be issued by Commissioner or Joint Secretary in Board- section 168(2) of CGST Act. for education purpose only-by Ca Avinash Lalwani

25. SECTION 35 (4)(d) Power of Commissioners/ Chief CommissionerThere are different types of taxable persons like proprietor, individual, partnership firm, HUF, etc. The small taxable person carrying out the activity may not be able maintain the elaborate records. Therefore, the Commissioner under section 35(4) of the GST Act has been empowered to permit such small taxable person to maintain the records in such manner as may be prescribed. The Commissioner may prescribe simplified records in order to take care of the situation prevalent in that particular trade or particular locality.To ensure uniformity all over India, such notification will be issued by Commissioner or Joint Secretary in Board- section 168(2) of CGST Act. for education purpose only-by Ca Avinash Lalwani

26. SECTION 35 (5)(e) Auditing of AccountsThe Return Rule 21(2) provides that every registered person whose aggregate turnover during a financial year exceeds Rs. 1 Crore, then he shall get the accounts audited under sub-section (5) of Section 35 of the GST Act and shall furnish a copy of the audited annual accounts and a reconciliation statement u/s 44(2) of the GST Act duly certified in form 9B electronically. The powers are provided to CBEC to prescribe any other documents as may prescribed, shall be attached with the report for education purpose only-by Ca Avinash Lalwani

27. LET US MOVE TO FAQCa AvinashLalwani09821118801,Mumbaiadlalwanica@gmail.com for education purpose only-by Ca Avinash Lalwani