GST Compliance Rating - Comprehensive Guide

GST compliance rating or GST rating acts as a score determined by the GST tax department for every person registered under GST. GST compliance rating would be based on the compliance record of the business with respect to GST. Hence, GST compliance rating would be similar to the CIBIL score used for rating an individual's creditworthiness.

What is GST Compliance Rating?

GST compliance rating refers to a score determined by the Goods and Service Tax Department for all the registered taxpayers, based on their record of compliance. The taxpayers shall receive an updated score periodically and the individual can check the rating at the public domain.

What factors affect GST rating?

The method of calculating the GST rating score focuses on the taxpayer's compliance under GST rules and regulations. Hence, the following aspects relating to GST compliance would have an impact on the GST rating.

Timely filing of GST Returns.
Timely payment of GST tax, penalty and other dues.
Cooperation with requests of GST Authorities.
Filing of other documents as required under GST rules and regulations.
History of promoters in maintaining compliance for related entities.

In addition to timely GST compliance, GST audit or inspection could be ordered by GST authorities from time to time to check various aspects of compliance under GST. Thus, ensuring that the business issues proper tax invoice, make a correct determination of taxes payable, reconciliation of return and various other factors could impact compliance rating.

What are the uses for GST rating?

Transparency with respect to tax compliance will immensely benefit the business, its employees, customer, creditors, other stakeholders and the Government. Further, by disclosing the compliance history of a person registered under GST in a simple to understand the score, trade creditors and financial institutions will be able to quickly determine the creditworthiness of a company. The rating mechanism shall also serve as feedback to the stakeholders of the company like promoters, investors and directors on indicating the steps to improve the compliance.

What details will be published in the GST compliance rating?

GST compliance rating shall reflect as a simple score. According to the GST Act, no information of any individual return or its part can be published in a matter that identifies a particular person without the previous written consent of the particular person. Further, the Act also probit third-parties from accessing any information or any individual GST return. Hence, the compliance rating would not have details like:

Name of suppliers
Name of customers
Amount of turnover
Products or services supplied
Address of supply

How will GST rating impact my business?

The compliance rating is a game-changer and would have a pervasive effect on the company ability to operate successfully, raise credit, hire employees and win-over customer. Currently, the individuals and entities can assess the CIBIL score only by Banks and Financial Institutions for the purposes of lending credit. Hence, the public domain restricts publishing the CIBIL scores. However, GST compliance ratings would be published in the public domain. As the rating would be readily available in the public domain, more persons including customer, employees, creditors, vendors and investors would access GST rating before or during the course of doing business. Hence, a low GST rating could signification impact a business in various areas like hiring, sales, raising credit and more. Thus, it is most important for all businesses to be aware of the factors impacting GST rating, check GST compliance rating for their business periodically and ensure that steps are taken to promptly comply with all GST rules and regulations.

How to improve the GST rating?

GST rating is tied to the GST compliance history of the taxpayer. Hence, if your GST rating is low, you would be able to improve your GST rating by beginning to file your GST returns on time and making timely GST payments. You can use a GST Accounting software like LEDGERS with return filing features, compliance alerts and auto-reconciliation facilities to improve GST rating.

Where can I find the compliance rating?

GST compliance ratings for all persons registered under GST shall appear at the public domain. Hence, a registered and unregistered person under GST would be able to readily access this information. The complete rules for the compliance rating and procedure for accessing the compliance ratings have not yet been notified by the Goods and Service Department. However, GST ratings are expected to be live before the end of 2017 and available at gst.gov.in website.

GST Registration

GST LUT Form