The industry and businesses will be given a ‘Compliance Rating’ on the basis of their credibility in terms of timely payment of taxes and filing of returns under GST structure.
Hasmukh Adhia, Revenue secretary said that a system of ‘GST Compliance Rating’ will be introduced and worked upon. The idea is to rate every trader and businessman on the basis of their track record and performance in proposed GST structure.
The rating will be made public on the GSTN portal. The benefit and underlying reason behind this is to allow every businessman to decide as to whether they should perform business transactions with the concerned entity or not. The compliance score or rating will be high or low depending upon the timely filing of returns and payment of taxes.
GSTN or GST network is the non-governmental organization or firm which has been made responsible for providing the IT infrastructure to the unified tax structure i.e. GST which is to be implemented w.e.f July 1, 2017.
The GST council has been made responsible for approval of procedures to be followed and implemented for giving the compliance rating. Although, as of now it is expected that the same will depend on how compliant the tax-payer is.
“If the trader or business entity fulfills the time-limit of return filing and other statutory requirements of the act, then they will be considered as ‘Compliant’ and thereby would fetch a better score”, as said by GSTN CEO, Prakash Kumar.
“Initially all the tax-payers will be put at the same level or equal level and the rating will fall only in case if the entity or taxpayer becomes non-complaint”, Prakash Kumar added.
A compliance rating is somewhat similar to what we can understand as Credit score provided by CIBIL based on the credit background of a loan borrower. It is a three-digit numeric score that varies for every individual and depends on credit payment history of an individual.
As of now the exact parameters for determining the Compliance rating score for GST are not notified. Though, there is a provision in Central GST act that every registered person will be allotted a GST compliance score by the government based on his compliance record.
It is also expected that the rating will provide the name of the taxpayer as well as the GST identification number (GSTIN) too.
The government is making all the efforts to implement the biggest indirect tax reform from July 1, 2017. They request the trade and industry to welcome same with warm heart and should be complacent about it. They request to make efforts to prepare for the GST regime.