BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.
This rating can be useful for businesses to showcase their compliance level to potential customers, lenders, and investors. Additionally, it can also help tax authorities to identify businesses that are not compliant and take necessary action. Overall, GST Compliance Rating significantly promotes GST compliance and builds a transparent and efficient tax system in India.
The GST Compliance Rating is a score assigned by the Goods and Services Tax (GST) authority to assess the level of compliance of a taxpayer with the GST rules and regulations. This rating system evaluates a business’s adherence to GST requirements, such as timely and accurate filing of returns, payment of taxes, and maintaining proper records. The rating ranges from 0 to 10, with 10 being the highest compliance rating. A higher rating indicates better compliance and may lead to benefits such as faster processing of refunds and fewer audits.
The introduction of a rating system under GST serves several purposes. First and foremost, it helps to file their returns on time, pay their taxes promptly, and maintain accurate records. A high rating can lead to benefits such as faster processing of refunds and fewer audits.
Additionally, the rating system helps to increase transparency and accountability in the GST system. It records a business’s compliance with GST regulations, allowing other stakeholders, such as customers and suppliers, to assess its reliability and trustworthiness.
Finally, the rating system helps the GST authority target its enforcement efforts better. By identifying businesses with low compliance ratings, the GST authority can prioritise its audits and investigations, thereby increasing the effectiveness and efficiency of its enforcement efforts.
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Maintaining GST compliance is essential for avoiding penalties and ensuring smooth business operations. Here are key practices every business should follow:
The GST compliance rating system is a mechanism proposed under the GST regime to score taxpayers based on their filing accuracy, timeliness, and overall compliance. However, the compliance rating feature is not publicly available at the moment. The framework has been defined under Section 149 of the CGST Act, but it has not been officially rolled out for public access or taxpayer dashboards.
Once implemented, businesses can check their compliance rating on the GST portal using their GSTIN. The rating will reflect their return filing history, invoice accuracy, payment timelines, and other factors that influence GST behavior.
While the system is yet to go live, businesses using tools like BUSY Accounting Software can still ensure strong internal compliance by automating return filing, minimizing errors, and maintaining clean records, paving the way for a high score when the rating becomes active.
Even though the GST compliance rating isn’t live yet, businesses can begin working towards a better rating by strengthening their compliance practices. Here are effective tips and tools to help:
BUSY helps you meet all these criteria with built-in compliance dashboards, reconciliation tools, and timely alerts, so you stay GST-ready and positioned for a strong compliance rating when the feature is introduced.
The GST compliance rating system is designed to reflect the discipline and trustworthiness of registered taxpayers. A higher rating indicates better compliance, which can lead to benefits such as faster refunds and lower scrutiny.
Under this provision, a business and the business holder can enjoy certain benefits. The refunds a taxpayer is entitled to are made on a percentage basis of his GST-compliant rating. E.g., if a taxpayer’s rating is an 8, he is entitled to a refund of Rs. 10,000. Of which, Rs. 8,000 is refunded soon after he applies for a refund, and the remaining Rs. 2,000 is returned after scrutiny. The compliance rating is updated regularly. It is intimated to the vendor or the business.
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There are no fixed criteria for the rating of a business or an individual, but experts understand that the following factors can play a role:
As a vendor, there are certain benefits that a person can enjoy. These include:
As a business, the higher the compliant rating, the higher the profit margins owing to a better reputation among customers and investors.
Compared to bigger businesses that can afford to outsource specific responsibilities, small companies need more resources. Thus, under the rating system, where compliance to remain competitive can be seen as encouraging for a big business, it can strain a small business. It is natural for a company to err when it comes to GST because it is a relatively new implementation. Still, an industry prone to delays and errors cannot build a healthy reputation to attract business.
Failure to comply with GST rules can result in financial penalties, legal consequences, and disruption to business operations. The GST law outlines specific penalties for different types of non-compliance, including delays, errors, and fraudulent activities.
Note: Penalties may vary based on the nature and severity of the offence. Repeated violations can lead to suspension or cancellation of GST registration.
GST compliance rating is a vital tool introduced by the government to encourage compliance with GST regulations. It provides a rating based on a business’s compliance history, which can be used by suppliers, banks, and other stakeholders to assess the credibility of the business. A good compliance rating can also provide various benefits to the business, such as faster refunds, more accessible access to credit, and improved reputation. Businesses need to maintain proper records, file timely returns, and comply with all the provisions of GST to achieve a good compliance rating.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.