09 OctPosted By: Arvind

Importance of GST Compliance Rating check


With the number of provisions under the implemented indirect law, GST Council has introduced the mechanism of GST Compliance Rating check in order to rate the performance of all the registered taxable Individuals. GST compliance rating check is one of the key concepts brought by the government to bring the transparency in the taxation system of India. As introduced under section 149 of Goods and Services Tax law, it is a new mechanism of rating to check and judge the performance of the business as per their compliance with the GST, having not been existed in the previous taxation system of the country.

What is GST Compliance Rating

Goods and Services Tax Compliance Rating check is basically a rating of the performance of all the registered taxable people under GST. As mentioned above, it was established under section 149 of the GST Act in order to rate the performance to know the authenticity and compliance of a registered taxable individual with reference to the provisions under GST, as the law reads. GST compliance rating check will be a system of scaling from 1 to 10, in which 10 infers the excellent rating with highest Compliant and 1 being the poor rating at least compliant. The possible parameters would be the promptness in tax paying, timely returns filing, invoice uploading, cooperation with the respective authorities (GST authorities) etc. However, these are speculations and actual rating has not been officially notified by the GST Council. The score shall be updated for a period of time and will be publicly available. 

Benefits of GST Compliance Rating

The government has come up with an excellent vision as this concept of rating does demand and require individuals to be GST Compliant on a total level. This will replace the delay in return filing and tax payments, which businesses do nowadays to gain time. The new rating system prevents the delay in crediting for legitimate and regular buyers also. The rating will be available publicly as other systems and concepts under the regime.

As per the GST compliance rating check, a business will entertain certain benefits on the basis of the rating. Following will be the benefits that a compliant individual may entertain:

  • Getting quick refunds
  • Reduction of audit chances by the tax authorities
  • Having good business and reputation in the market
  • Buyers can acquire input tax credit quickly

The mechanism of GST compliance rating check will affect both buyers and sellers in a logically good way. Buyers, as per the rating, will seek the sellers with the higher rating so that the input tax credit can be availed immediately. On the other hand, Sellers will catch more customers on the basis of higher rating.

In this way, GST Compliant rating check will catalyze a healthy competition among businesses and trades.

Final words

The previous system of taxation in India such as Value Added Tax lacked any such kind of rating check. The way tax was levied previously was unfair according to many economic philosophers, as in the model of democracy. Preference of higher rating individual will be everybody’s target as a mark of a healthy business. The GST Compliant Rating check not only brings the transparency in the system but also induces a higher growth of the market. The new mechanism will lessen the chances of tax evasion. 

In case you need assistance with GST Registration you can fill out our inquiry form and arrange a call from E-Startupindia business advisors or you can connect with us at 8881069069 

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