GST Accounts and Records: Manner of Maintenance of Accounts, Period of Retention of Relevant Records

Under GST in India, maintaining accurate accounts and records is crucial for compliance and efficient tax management.

Manner of Maintenance of Accounts:

1. Accurate and Up-to-Date Records:

   • Sales and Purchases: Maintain detailed records of all sales and purchase transactions, including invoices, receipts, and purchase orders.
   • GST Invoices: Keep copies of all GST invoices issued and received. These invoices should include GST registration numbers, the amount of tax charged, and other necessary details.
   • Returns and Payments: Record all GST returns filed and payments made, including challan details and payment receipts.

2. Electronic and Physical Records:

   • Digital Records: Use accounting software or GST-compliant tools to keep electronic records. Ensure that the software can generate GST-compliant invoices and maintain records of input tax credits.
   • Physical Records: For businesses maintaining physical records, ensure that they are organized and stored safely to prevent loss or damage.
3. Reconciliation:
   • Bank Statements and Books: Regularly reconcile bank statements with your books of accounts to ensure that all transactions are accurately recorded.
   • Input and Output Tax Credit: Periodically reconcile the input tax credit claimed with purchase records and the output tax liability with sales records to avoid discrepancies.

4. Documentation of Transactions:

   • Contracts and Agreements: Maintain copies of contracts, agreements, and other legal documents related to business transactions.
   • Supporting Documents: Keep supporting documents like bills, receipts, delivery challans, and transport documents.

Period of Retention of Relevant Records:

1. General Rule:
   • Retention Period: Under GST law, businesses are required to retain all relevant records and documents for a period of 6 years from the end of the financial year to which they relate.

2. Specific Documents:

   • Invoices and Receipts: Retain for at least 6 years. This includes invoices for sales and purchases, debit and credit notes, and receipts of payment.
   • Returns and Challans: Maintain records of GST returns filed (GSTR-1, GSTR-3B, etc.) and challans used for payments for 6 years.
   • Tax Credit Documentation: Keep documentation supporting input tax credits claimed for the same period.
   • Contracts and Agreements: Retain these documents for the duration of their validity and for 6 years thereafter.

3. Electronic Records:

   • Digital Copies: If records are maintained electronically, ensure that the digital formats are backed up and can be accessed throughout the retention period.

4. Government Requests:

   • Inspection and Audit: Records must be available for inspection or audit by tax authorities upon request, within the retention period.