Comprehensive Guide for Compliance Rating

All You Need to Know About Compliance Rating and Its Benefits

Compliance rating is the score given to a registered taxable person based on his timely filing of GST return and other necessary compliance. Compliance rating is dealt with Section 149 of the Central Goods and Services Act (CGST), 2017. And since the traditional tax structure had no process to rate the taxpayers, therefore, this is an excellent initiative.

Compliance rating is a score assigned between numbers 0 to 10 which displays the taxpayer’s GST compliance. The higher the score, the better is the compliance. If a person wants to know his compliance rating, he can refer to the GST network website.

Criteria for Compliance Rating

The following are the basis on which a registered taxable person receives a compliance rating:

1. Uploading his invoices on time.
2. Monthly and annual returns filing within the stipulated period.
3. Tax payment on time.
4. Providing accurate details of input credits.
5. Extends his cooperation to GST authorities.
6. Other essential compliances with GST rules and regulations.

Benefits of Compliance Rating to a Taxable Person

A taxable person receives many benefits. They are:

1. He is likely to get more business as his clients get to maintain their compliance rating by working with GST compliance firm.
2. Enhanced market position.
3. Consumers will prefer a businessperson with high compliance ratings, which shows that the business is punctual in filing returns. It makes it easier for them to claim the input credits.
4. He will not come under scrutiny by the GST authorities as they must undergo fewer external audits compared to the non-compliant firm.
5. A person with a good rating will enjoy immediate tax returns.
6. Benefits of compliance rating to businesspeople.

Here is Why Good Compliance Rating is Important

1. It is a reliable indicator of the sound financial health of a business enterprise.
2. The rating helps to decide which businesspeople are suitable for collaboration. It assists in avoiding transactions with people who have lower ratings. Such low-rated persons may not follow GST provisions and maybe having a casual attitude towards regulations.

Provision for Blacklisting Dealers with a Low Compliance Rating

The government displays the compliance scores of taxpayers and updates it from time to time. It will blacklist those people with low ratings based on specific parameters. They are:

• There has been a default for three months continuously in ITC which has been reversed.
• There has been no filing or returns for three months nonstop.
• Short reporting of sales more than the set limit for six months nonstop.

By this blacklist, the government intends to male things tougher for non-compliant people. It enables businesspeople to avoid dealings with those mentioned on the list.

Three Steps to Maintain GST Compliance

Follow these three steps to maintain your compliance rating:

1. File your GSTR-1 and GSTR-2 before the deadline
   Every business must file their GSTR-1 and GSTR-2 by 10th and 15th respectively including all the sales and purchase transactions.
2. Pay your due taxes
   According to Section 27 (3) of GST laws, returns will be nullified if a business files a GST with existing tax dues. All taxes must be paid before filing a new tax return for the next tax period.
3. Submitting the annual returns
   On-time submission of GSTR-9 consolidated work along with the monthly filing of GSTR-1 and GSTR-2.

For more information, feel free to contact 3E Accounting Team if you have any queries. We aim to provide the best service.

3E Accounting India

3E Accounting India is a corporate service provider and accounting firm assisting clients with company formation and incorporation. We offer company secretary and business-related services in India.