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GST Compliance Rating

gst compliance rating

The idea behind introduction of GST Compliance Rating is to encourage GST registered businesses to be fully compliant with GST rules & regulations. If you are a GST registered business and wonder about GST compliance rating and how you can get it, read this article to get all your answers related to this compliance rating. 

What is GST Compliance Rating?

This is the rating that a business registered under GST receives from the tax department, depending on how well it complies with GST provisions. It is a kind of performance rating that every registered business will go through, and it will be done irrespective of nature, size, or turnover of the business.

If you are a business owner, you will have to ensure that you comply with every rule or regulation provided in the GST Act. Everything related to GST – payments, monthly/quarterly return filings, annual return filing, and maintaining proper records in accounting books, should be in order. The tax department will award a score to the business, and show how compliant it is. The lower the rate, the bad the compliance!

How businesses will be rated under GST Compliance Rating

Business owners need to understand how the GST rating system would rate them to assess how fair the scheme is. By understanding the factors that influence the rating, you will know what you need to improve for a higher rating, which will give credibility to your business and competitive advantage.

Here are the factors that determine the compliance rating for businesses: 

How does GST compliance rating work

maintain high gst compliance rating

According to the GST provisions, it is proposed that GST refunds will be made based on this rating. If your business rating is 7 out of 10, you will get 70% of the total refundable amount. The balance amount will be paid after the scrutiny. Similarly, business with a rating of 6 will be entitled to a 60% refund only. 

Please note that the department has not yet notified the actual rating system. 

What are the benefits of a higher GST Compliance Rating

Here are the benefits that a business will enjoy if it has a high GST compliance rating. 

  1. Receive more tax refunds immediately
  2. Receive and claim input tax credit faster
  3. Attract more customers and grow exponentially
  4. Less chances of scrutiny or an audit from the tax authorities
  5. Build positive business relationships

What are the disadvantages of this rating scheme?

If some businesses do not get a high GST rating, it can be a bad scheme for them. 

  1. It may hamper business reputation
  2. No GST refunds will be given to businesses having rating below average
  3. Business might lose customers and other growth opportunities
  4. Invite trouble from GST authorities or tax department

How businesses will know their rating

Businesses can access the GST portal to know their GST compliance rating. This rating will be linked to GSTIN. Since this rating will be public, one can see others’ ratings. 

How to maintain a good GST rating

Now that you know the benefits of having a high GST rating, you should start taking measures to maintain that rating. You can use the best billing and accounting software, myBillBook to be GST compliant business. 

With myBillBook, you can create GST & non-GST invoices, manage inventory, track your expenses, generate reports for GSTR-1 & GSTR-3B filing, and much more.

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