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Chapter 12 – Accounts and Records

Introduction
In the context of the Goods and Services Tax (GST), taxpayers are primarily responsible for assessing

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and reporting their own tax liabilities. They must calculate the taxes they owe and submit returns for
specific tax periods. Compliance verification is conducted by the tax department through document
checks rather than physical inspections. Taxpayers are obligated to maintain financial records and
accounts, which may be examined during compliance verification.

Registered individuals must keep records at their main place of business. Warehouse owners, storage
operators, and transporters must also maintain specified records, even if they are not registered under
GST. The Commissioner can require specific groups of taxpayers to maintain additional records or use
alternative methods for accounting if necessary.

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Taxpayers have the flexibility to maintain their records electronically or manually, and there is no
prescribed format for record-keeping. The CGST Act and State GST laws specify the records to be
maintained and the retention period. Additionally, the provisions for accounts and records under the
CGST Act apply to the IGST Act.

Who is Required to Maintain Books of Accounts and at Which Place?

Every registered individual must maintain financial records at their main place of business, referred to
as Principal Place of Business (PPoB), as well as at any additional places of business mentioned in their
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registration certificate, referred to as Additional Place of Business (APoB). If the registration certificate
specifies multiple places of business, records for each location must be kept at the respective premises.

Unless proven otherwise, if any documents, registers, or accounting books belonging to a registered
person are discovered at any premises not listed in the registration certificate, it will be assumed that
the registered person maintains them.

Which Accounts and Records are Required to be Maintained?

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1. A true and correct account of following is to be maintained:

a. production or manufacture of goods;
b. inward and outward supply of goods or services or both;
c. stock of goods;
d. input tax credit availed;
e. output tax payable and paid
f. such other particulars as may be prescribed.
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2. The Commissioner may instruct specific taxable individuals to maintain extra accounts or
documents for specific purposes.
3. If the Commissioner believes that some taxable individuals cannot maintain accounts as per
the regulations, they can allow these individuals to maintain accounts in a manner prescribed
by the authorities, with written reasons provided.
4. The additional records to be maintained by specified persons are as under:
a. Registered person:
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i. Registered individuals must maintain accurate records in addition to the

information specified in section 35(1). These records include:
1. Keeping a record of goods or services imported/exported.

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2. Maintaining records of supplies that incur tax under reverse charge,
including relevant documents such as invoices, bills of supply, delivery
challans, credit notes, debit notes, receipt vouchers, payment
vouchers, and refund vouchers.
3. Maintaining a separate account for advances received, paid, and any
adjustments made.

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4. Documenting details such as the names and complete addresses of
suppliers from whom they received goods or services subject to
taxation under the Act.
5. Documenting the names and complete addresses of recipients of
goods or services, as required by the provisions of this Chapter.
6. Recording the complete address of the premises where goods are
stored, including those in transit, along with details of the stock stored
there.
ii. However, if taxable goods are discovered to be stored at locations not

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declared and without valid documentation, the proper officer will calculate
the tax payable on those goods as if they had been supplied by the registered
individual.
iii. Suppliers are obligated to maintain records related to the stock of goods and
tax details, except for those who have opted for the composition scheme.
These records must include:
1. Accounts of stock, which should include information about the
opening balance, receipts, supplies, losses, thefts, destruction, write-
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offs, gifts, free samples, and the remaining stock, including raw
materials, finished goods, scrap, and wastage.
2. A tax details account containing information about tax payable
(including reverse charge tax), tax collected and paid, input tax, input
tax credit claimed, along with a register of tax invoices, credit notes,
debit notes, and delivery challans issued or received during each tax
period.
b. Agent: Every agent shall maintain accounts depicting the:
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i. particulars of authorisation received by him from each principal to

receive/supply goods/services on behalf of such principal separately;
ii. particulars including description, value and quantity (wherever applicable) of
goods/services received on behalf of every principal;
iii. particulars including description, value and quantity (wherever applicable) of
goods/services supplied on behalf of every principal;
iv. details of accounts furnished to every principal; and
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v. tax paid on receipts/ supply of goods/services effected on behalf of every

principal.
c. Manufacturer: Apart from other records, every registered person manufacturing
goods has to maintain monthly production accounts showing quantitative details of
raw materials/services used in the manufacture and quantitative details of the goods
so manufactured including the waste and by products thereof.
d. Service Provider: Every registered person supplying services has to additionally
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maintain the accounts showing quantitative details of goods used in the provision of
services, details of input services utilised and the services supplied.

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e. Person executing works contract: Every registered person executing works contract
shall keep separate accounts for works contract showing:
i. the names and addresses of the persons on whose behalf the works contract
is executed;
ii. description, value and quantity (wherever applicable) of goods/services
received for the execution of works contract;

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iii. description, value and quantity (wherever applicable) of goods/services
utilized in the execution of works contract;
iv. the details of payment received in respect of each works contract; and
v. the names and addresses of suppliers from whom he received goods or
services.
f. Custodian/clearing and forwarding agent: Custodian or clearing and forwarding
agents, who have control over goods as carriers or in the role of handling deliveries or
dispatches to recipients on behalf of registered individuals, must maintain accurate
records for the goods they manage on behalf of these registered individuals. These

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records must be provided to the proper officer whenever requested.
g. Owner/operator of a warehouse/godown and transporter: Owners or operators of
warehouses or storage facilities, as well as transporters, are required to:
i. Maintain records of information related to the sender, recipient, and other
relevant details of stored goods in the manner prescribed.
ii. If they are not already registered for GST, they must obtain a unique
enrollment number by electronically applying through Form GST ENR-01 on
the GST Common Portal. Those enrolled in another state or union territory are
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considered enrolled in the current one as well. They can also update the
provided information but cannot use any GSTIN.
iii. Transporters engaged in the business of transporting goods must maintain
records of the goods transported, delivered, and those in transit, including the
GSTIN of registered consignors and consignees for each of their branches.
iv. Owners or operators of warehouses or storage facilities must:
1. Maintain accounting records indicating the duration for which specific
goods remain in the warehouse. This should include details of
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dispatch, movement, receipt, and disposal of such goods.

2. Store goods in a way that allows for item-wise and owner-wise
identification, and facilitate physical verification or inspection by the
proper officer upon request.

How the Accounts and Records will be Maintained?

1. Records can be kept manually: Registered individuals who choose to maintain their books of
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account manually must number each volume in a sequential order.

2. Records can be kept in electronic form:
a. Books of account encompass any electronic data stored on electronic devices.
b. Registered individuals may maintain these accounts and other details in electronic
form on electronic devices and must authenticate them using a digital signature.
c. Proper electronic backups of these records must be kept in a way that allows for the
restoration of information in case of accidents or natural disasters within a reasonable
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timeframe.

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d. If requested, individuals maintaining electronic records must provide the relevant
records or documents in a hard copy or electronically readable format, duly
authenticated.
e. When accounts and records are stored electronically, individuals must, upon request,
provide details of the files, passwords, and explanations for access codes, if necessary,
along with a printed sample copy of the stored information.

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3. No erasing or overwriting of entries:
a. Entries in registers, accounts, and documents should not be erased or overwritten.
b. Incorrect entries, except those of a clerical nature, should be crossed out with
attestation, and then the correct entry should be recorded.
c. If registers and documents are maintained electronically, a log of every edited or
deleted entry should be maintained.
4. Accounts maintained by registered individuals, along with all invoices, bills of supply, credit
and debit notes, and delivery challans related to stocks, deliveries, inward supply, and outward

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supply, must be preserved for the duration specified in section 36 (discussed later in this
Chapter). These records, if maintained manually, should be kept at all related places of
business mentioned in the registration certificate and should be accessible at each related
place of business where digital record-keeping is used.
5. Registered individuals must, upon request, produce the books of accounts required to be
maintained under any currently applicable law.

What are the Consequences of Failure to Maintain the Accounts?

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If a registered individual does not maintain accurate records for goods and/or services as required by
section 35(1), the competent officer will calculate the amount of tax owed for the unaccounted goods
or services (or both) as if the registered individual had supplied them. The relevant provisions of
section 73 or section 74, as applicable, will be used to determine this tax amount accordingly.

Period of Retention of Accounts [Section 36]

Any registered individual required to maintain books of account or other records as per the guidelines
in section 35(1) must keep them for a duration of 72 months from the deadline for submitting the
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annual return for the relevant year associated with those records.

However, a registered individual who is involved in an appeal, revision, or any other legal proceedings
before an Appellate Authority, Revisional Authority, Appellate Tribunal, or Court, whether initiated by
them or by the Commissioner, or is under investigation for an offense under Chapter XIX, must retain
the books of account and other records related to the subject matter of such appeal, revision,
proceedings, or investigation for a period of one year after the final resolution of the appeal, revision,
proceedings, or investigation, or for the previously mentioned 72-month period, whichever is longer.
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Question 1 – ICAI SM

Who is required to maintain books of accounts and at which place in terms of Section 35 read with
relevant rules?

Solution

Every registered person shall keep and maintain, his books of accounts at his principal place of business
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and books of account relating to additional place of business as mentioned in the certificate of

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registration. 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.

Question 2 – ICAI SM

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Mr. Sky is engaged in the business of trading of mobiles. He is eligible for composition scheme and has
opted for the same. He seeks your advice for records which are not required to be maintained by him
as composition taxable person.

Solution

A supplier who has opted for composition scheme is not required to maintain records relating to:

1. Stock of goods: Accounts of stock in respect of goods received and supplied by him, and such
accounts shall contain particulars of the opening balance, receipt, supply, goods lost stolen,

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destroyed, written off or disposed of by way of gift or free sample and the balance of stock
including raw materials, finished goods, scrap and wastage thereof.
2. Details of tax: Account, containing the details of tax payable (including tax payable under
reverse charge), tax collected and paid, input tax, input tax credit claimed, together with a
register of tax invoice, credit notes, debit notes, delivery challan issued or received during any
tax period.

Thus, Mr. Sky is not required to maintain above mentioned records.

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Question 3 – ICAI SM

Mr. Harsh Manjula is engaged in the business of works contract services and request your guidance as
to specific records required to be maintained by him under GST law, if any.

Solution

Mr. Harsh Manjula, executing works contract shall keep separate accounts for works contract showing:
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• the names and addresses of the persons on whose behalf the works contract is executed;
• description, value and quantity (wherever applicable) of goods/services received for the
execution of works contract;
• description, value and quantity (wherever applicable) of goods/services utilized in the
execution of works contract;
• the details of payment received in respect of each works contract; and
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the names and addresses of suppliers from whom he received goods or services.

Question 4 – ICAI SM

Chill Chain Cold is operating cold storage warehouse and seeks your guidance on the GST accounts and
records to be maintained by them in terms of Section 35.
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Solution

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Chill Chain Cold shall maintain records of the consigner, consignee and other relevant details of the
goods in the prescribed manner.

Chill Chain Cold shall also maintain books of accounts with respect to the period for which particular
goods remain in the warehouse, including the particulars relating to dispatch, movement, receipt, and
disposal of such goods.

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Chill Chain Cold shall store the goods in such manner that they can be identified item-wise and owner-
wise and shall facilitate any physical verification or inspection by the proper officer on demand.

Question 5 – ICAI SM

Mr. X is of the view that records are to be mandatorily maintained manually only. You are required to
examine the view taken by Mr. X?

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Solution

The view taken by Mr. X is not valid in law. Books of account include any electronic form of data stored
on any electronic device. The registered person may keep and maintain such accounts and other
particulars in electronic form stored on any electronic device and record so maintained shall be
authenticated by means of a digital signature. The registered person maintaining electronic records
shall produce, on demand, the relevant records or documents, duly authenticated by him, in hard copy
or in any electronically readable format.

Where the accounts and records are stored electronically by any registered person, he shall, on
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demand, provide the details of such files, passwords of such files and explanation for codes used,
where necessary, for access and any other information which is required for such access along with a
sample copy in print form of the information stored in such files.
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