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Sunday, Aug 18, 2019

Traders watch out: Keep records of goods stolen, freebies or pay GST

Tax experts say the new rules will create an accounting nightmare as most of the smaller businesses are yet to use computers to record daily transactions and still rely on hand-written note books.

business Updated: Apr 20, 2017 22:33 IST
Raj Kumar Ray
Raj Kumar Ray
Hindustan Times, New Delhi
(HT photo)

Traders and businessmen are likely to end up paying higher tax under the new Goods and Services Tax (GST regime if they are careless in maintaining detailed records of merchandise lost in transport, stolen or destroyed.

Records of free samples and gifts to consumers will also have to be maintained in details under the new tax regime that will kick in from July 1 and is touted as the biggest tax reform since Independence.

Taxpayers also cannot erase, over-write in their books of account, according to the draft GST rules put out by the finance ministry.

“Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries shall be scored out under attestation and thereafter correct entry shall be recorded,” it said.

Tax experts say the new rules will create an accounting nightmare as most of the smaller businesses are yet to use computers to record daily transactions and still rely on hand-written note books.

“This may also pose as compliance challenge for small businesses who may be using readily available basic accounting software,” said Preeti Khurana of, which helps businessmen compute taxes with its accounting software.

“The new draft rules require maintenance of trail of each deleted or edited entry, in electronic records,” she said.

Where registers and other documents are maintained electronically, there must be a log of every entry edited or deleted.

“Unless proved otherwise, if any documents, registers, or any books of account belonging to a registered person are found at any premises other than those mentioned in the certificate of registration, they shall be presumed to be maintained by the said registered person ,” the rules stated.

The rules also mandate maintaining separate account or records for each activity, including manufacturing, trading and provision of services.

“A true and correct account of the goods or services” with relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt, payment and refund vouchers and e-way bills will have to be maintained under the new GST regime.

The rules stipulate maintaining of accounts of stock for each commodity received and supplied with clear details of “the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples and balance of stock including raw materials, finished goods, scrap and wastage thereof”.

Also, a separate account of advances received, paid and adjustments will have to be maintained. Alongside, details of tax payable, tax collected and paid, input tax, input tax credit claimed, together with a register of tax invoice, credit note, debit note, delivery challan issued or received during any tax period will have to be maintained.

Particulars including name and address of suppliers as well as those receiving the supplies will have to be kept.

Manufacturers have to maintain monthly production accounts, showing the quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured, including the waste and by-products thereof.

Service providers, on the other hand, will have to maintain the accounts showing the quantitative details of goods used in the provision of each service, details of input services utilised and the services supplied.

All physical records, including invoices, bills of supply, credit and debit notes, and delivery challans have to be preserved for a particular period to be provided in the GST laws.

A proper back-up of electronic records will have to be maintained and preserved in a manner that the information can be restored within reasonable period of time in the event of destruction of such records due to accidents or natural causes.

First Published: Apr 20, 2017 20:36 IST

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