Masters India

GST Compliance Rating Concept

Sakshi Jain
Sakshi Jain at March 13, 2023

GST Compliance

GST Compliance Rating is a concept that is introduced to score the compliance performance of the business. GST Compliance rating can impact the day to day business transactions and your relationship with the vendors and the sellers.

What is GST Compliance Rating?

GST Compliance rating is a system under which the GST authorities rates your business based on how well your business has adhered to the GST rules and regulations. GST Compliance Rating scale starts from 0 and can go up to 10. However, you can change your GST Compliance Rating over time by adhering to the rules and regulations.

What are the factors on which GST Compliance Rating works?

Here are the factors on which GST Compliance Rating may work upon:

  1. Payment of taxes on time
  2. Furnishing GST returns on or before the prescribed due date
  3. Carrying out timely GST reconciliations
  4. Cooperating with the GST authorities

Does GST Compliance Rating impact your business partnerships?

As per the CGST Act, your GST Compliance Rating can be stated in the public domain. If this case, your GST Compliance Rating can be seen by anyone who is looking for the same. Why is it so important?

Under GST you need to make timely tax payments so that a person who is closely linked with that supply chain can claim Input Tax Credit (ITC) of the same. In case if you do not make a payment on time it may impact the whole supply chain. So, through the above statement, we can conclude that GST Compliance Rating will act as a base for the vendors at the time of selecting their business partners. In simple words, in case if a vendor wants to buy something from you he/she will check your GST compliance rating score. In case if you have a high GST compliance rating score there will be higher chances of building a business partnership with the vendors.


Does GST Compliance Rating impact Tax Refunds?

Under GST, any taxpayer who pays over and above GST is eligible to claim the refund. Your GST compliance rating plays a major role as it may determine how your refunds will be processed. For instance, if your GST compliance rating is less than 5 you may not able to get the provisional GST refund. In simple words, GST compliance rating will not only impact your tax refunds but may also affect your cash flow.

The Bottom Line

As under GST, compliance rating will be allotted to the taxpayer automatically. So, it is important to pay and furnish your taxes and GST Return on time. A single late GST return may impact compliance rating. However, in case if there is any delay due to any problem with the GST Portal, your GST Compliance rating will not be affected. Moreover, filing and paying GST will help you build a healthy business partnership and claim a GST refund easily.

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