The Concept of GST Compliance Rating

GST Compliance Rating is a process through which a taxpayer registered under GST is scored based on compliance performance. In addition, GST compliance rating will play a significant role in keeping a good relationship with the suppliers and vendors. 

What is GST Compliance Rating? 

GST Compliance rating is a system that rates all the registered taxable persons based on how compliant they are to the GST rules and provisions. GST compliance rating scale begins from 1 and can go up to 10. However, a taxpayer having an average GST compliance rating, changes over time, provided that he/she follows all the GST-related rules and provisions. 

Reasons behind the Concept of GST Compliance Rating 

The main reason behind the concept of GST compliance rating is to motivate taxpayers to comply with the GST provisions. Moreover, the GST compliance rating will also restrain the delay of ITC due to the non-compliance of certain persons. 

How does GST Compliance Rating work? 

As the GST compliance rating process is not yet notified by the government but the rating will surely depend on the following factors: 

1. Filing GST returns on time 
2. Timely payment of tax liability 
3. Reconciling mismatches in filed GST Returns 
4. Following all other prescribed GST compliances 

Advantages of GST Compliance Rating Concept 

1. Immediate GST Refunds and ITC 
2. Retaining old clients and attracting new ones 
3. Lessen the chances of GST audits by tax authorities 

GST Compliance Rating Impact on ITC and Vendor’s Selection Process 

A taxpayer will have to pay the tax liability on time, so, that the recipient can claim ITC. Moreover, GST Compliance Rating will also affect vendor’s selection process of their business partners. A higher compliance rating will increase the chances of building a business partnership. In simple words, if a vendor wants to deal with a taxpayer, he/she will check the GST compliance rating score. 

GST Compliance Rating Impact on Tax Refunds 

GST compliance rating of a taxpayer will play a vital role in claiming the refund. Any taxpayer whose GST compliance rating will be less than 5 will not be able to claim a provisional GST refund. 

How to Get GST Compliance Rating? 

GST Compliance Rating will be updated from time to time on a public domain. And the concerned taxpayer will be notified about it on their registered mail-id or phone number. 

Way Forward 

As we already know that the taxpayer’s compliance will be rated as per the concept of the GST compliance rating system. So, once the final GST compliance rating system is rolled out by the Government, it will be necessary for taxpayers to file their GST returns on time. The consequences of non-compliance will affect the business partnership and working capital. Thus, the GST compliance rating process will force taxpayers to stay GST compliant and prevent tax evasion incidence. 

How Can GSTrobo^® Help You? 

GSTrobo® is a leading GSP/ASP that has proven GST software with state-of-the-art technology. This GST software seamlessly integrates with all the ERPs and automates all the GST compliances.