FAQ on the GST in India

Last updated on 02 November, 2017

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Compliance Rating

Basics

What is compliance rating?

The GST compliance rating is a score given by the government to all registered businesses based on their record of compliance with the GST rules and regulations. This score will be made visible to all other businesses on the GSTN portal and will be updated periodically.

Where can I view my firm’s compliance rating?

You can view your firm’s compliance rating in the GSTN portal.

Calculation and maintenance

On what criteria is compliance rating calculated?

Compliance rating is calculated based on the following parameters:

  • Punctuality in uploading invoices
  • Timely filing of monthly and annual returns
  • Timely tax payment and reconciliation
  • Furnishing accurate details of input credits used
  • Complying with GST rules and regulations, and cooperation with the tax officials
How can I maintain a good compliance rating?

To maintain good compliance rating:

  • File your GSTR-1 and GSTR-2 returns on time.
  • Ensure that you’ve paid your taxes due for the previous tax period before filing returns for the next tax period.
  • Submit your annual GSTR-9 return on time.  

Effect on business 

What are the advantages of having a firm with a high compliance rating?
  • Your firm is likely to attract more business deals, as your clients can maintain their own compliance rating by doing business with you.
  • A good compliance rating indicates that your organisation is punctual in filing returns, making it easy for buyers to claim timely input tax credit on their purchases.
  • Your business is likely to undergo fewer external audits compared to non-compliant businesses.
What happens if my supplier fails to pay their taxes due or file their returns? 

If your supplier has not paid their taxes due, their tax return will be deemed invalid by the GST Council. This means that you (the buyer) will not be able to validate your GSTR-2, and therefore, you won’t be able to claim input tax credit. In this case, your compliance rating will decrease mainly because of your supplier’s non-compliance.

How does compliance rating affect refunds?

A registered business can claim refunds only if they have an average compliance score of at least 5 (on a scale of 0-10). Also, the provisional refund provided to a firm is directly proportional to the firm’s compliance rating. It’s advisable to comply with the GST Acts to ensure that your firm is able to claim 100% of its payable refunds.

For example, if the compliance rating of a firm is 6 out of 10, they will be eligible for an immediate provisional refund of 60% of the total refund that is payable to them. 

What happens if a business owner is consistently non-compliant?

Businesses will be blacklisted in case of consistent non-compliance. Factors such as consistent delay in filing returns and unpaid taxes due are considered for blacklisting.

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