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Importance of GST Compliance Rating under GST Regime

May 23, 2017

As per Section 149 of the CGST / SGST Act, every registered person shall be assigned a compliance rating based on the record of compliance in respect of specified parameters. Such ratings shall also be placed in the public domain. A prospective client will be able to see the compliance ratings of suppliers and take a decision as to whether to deal with a particular supplier or not. This will create healthy competition amongst taxable persons.

The Bare Text of Section is as under:-

149. (1) Every registered person may be assigned a goods and services tax compliance rating score by the Government based on his record of compliance with the provisions of this Act.

(2) The goods and services tax compliance rating score may be determined on the basis of such parameters as may be prescribed.

(3) The goods and services tax compliance rating score may be updated at periodic intervals and intimated to the registered person and also placed in the public domain in such manner as may be prescribed.

Further, as per Rule 3 of Draft Rules pertaining to provisional refund under GST will only be issued where the GST compliance rating, where available, of the applicant is not less than five on a scale of ten.

It is anticipated that the GST Compliance rating will be to drive competition among the trade to implement and conduct in compliance friendly manner. Further, In our view the government may make necessary GST points for eligibility to participate in tenders of governmental authorities etc.

This article was first published on LinkedIn by Ankit Gulgulia

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