What is compliance rating under GST

Term compliance rating under GST


Compliance Rating under GST

The details about compliance rating under GST are explained here. 

GST proposes to bring in a new system of compliance rating score for every taxable person, based on the record of compliance with provisions of law. This score shall be determined on the basis of certain parameters such as timely furnishing of returns, accuracy of data furnished, timely payment of taxes, etc. The GST compliance rating score is somewhat similar to the concept of the Denied Entities List (DEL, earlier called ‘Black List’) under the provision of Rule 7 of the Foreign Trade (Regulation) Rules, 1993, wherein a total of 14 conditions have been described for invocation DEL before a company can be refused a license by the Directorate General of Foreign Trade.

The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain. A prospective customer/client can view his supplier’s GST compliance rating score and take appropriate decisions whether to deal with a particular supplier or not. It is therefore important for every taxable person to ensure adequate level of compliance, which will not only facilitate ease of doing his business, buy will also have a bearing on his reputation.

Basis for GST Rating:

GST Rating will be based on certain criteria which are yet to be prescribed. However, experts believe that the following factors could play a key role in deciding compliance ratings:

  • Timely payment of taxes
  • Timely filing of returns
  • Timely reconciliations
  • Compliance of various other time limits under GST
  • Cooperating with the GST authorities

Benefits of Good GST Rating:

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

  • Get refunds immediately
  • Buyers can get input tax credit immediately
  • Attract more business
  • Reduce chances of audit by the tax authorities.
  • A low GST rating will attract higher scrutiny from the department.
  • Enjoy better reputation

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