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What is a GST Compliance Rating?

Sakshi Jain
Sakshi Jain at March 14, 2023

 Compliance Rating in GST

The new generation taxation system, GST has its own and unique way of measuring and rating the adherability and checking the compliance parameters of tax payers – much like the CIBIL score these days.

Unlike the older era of taxation regime, where there was no mechanism to rate and grade the tax payers, the GST has an inbuilt module, which ranks every GST registered tax payer based on several parameters.

The article aims to apprise you about everything you must know about the GST Compliance Rating through the following pointers:

  • What is a GST Compliance rating and its importance?
  • How does the GST Compliance Rating work?
  • Advantages of GST Compliance Rating.
  • Disadvantages of GST Compliance Rating.
  • Black listing of dealers.

What is a GST Compliance Rating and its importance?

GST Compliance Rating is primarily a numerical value and a score between [0 -10] assigned by the government to all the tax payers, which speaks about being their GST rating compliance. The rating is assigned to all the GSTIN and GSTUIN holders based on a number of factors including but not limited to your return filing habits on time, accuracy of your fed data etc. among many others.

Though the actual rating format is still to be announced, however it should be similar to having a 0-10 scale, where zero counts for the lowest score and 10 denotes a cent percent compliance.

The rating will play a pivotal role in the days to come and will probably be the most sought after criteria for the businesses to join hands. People will refrain from transacting with them, who have lower compliance rating, i.e. those who are by passing the code of conduct of GST or are casual towards it or not adhering to the GST provisions, making them stand out from the good books of the government.

To avail the ITC and also keep it flowing seamlessly, the rating would be a critical factor. If the ITC is not available smoothly, the working capital will also be impacted adversely. The rating will also impact the legitimate buyers to avail the input tax credit, if the suppliers is not complying up to the mark.

Nutshell, the entire business community have to strongly strive for staying on top of it for the smooth commencement of their taxation module.


How will the GST Compliance Rating work?

Though the provisions of GST Compliance Rating are yet to be announced, however industry experts predict it to be based on the following key indexes:

  • Filing GST returns and paying taxes on time.
  • Timely and transparent reconciliation
  • Matching of transactions of inward and outward supplies
  • Other time limit provisions to be complied
  • An open, clear and helping attitude with and towards the GST authorities

It is being proposed that the businesses will enjoy the tax credits and other benefits, based on this rating. Though, it is yet to be formally announced, however, the rating will work somewhat as follows:

The person would only get a percentage of his taxation credits based on his rating. If the rating is 8, then 80%, if 6 then 60% and if it is less than the average or say below 5, then he may only be eligible to avail the provisional refund.

Advantages of GST Compliance Rating

Talking about the advantages of having a high GST Compliance Rating is like talking about the benefits of having a fit body – countless. A high compliance rating will denote the sound financial health of the organization and its healthy repo with the government.

The buyers will choose the high raters over the low ones for their mutual benefit about availing an uninterrupted input credit and also letting the government know, that they want to contribute towards having a law abiding society and good governance.  The sellers with high rating would be seen with faith and trust, and eventually attract more buyers.

In such a scenario, the businesses will like to and also have to comply at the highest level and a healthy taxation complying ecosystem will slowly emerge and develop, resulting to a transparent and tax compliant economy and enhanced revenues for the government.

Disadvantages of GST Compliance Rating

Although the long term after-effects, the bigger picture and advantages of the GST Compliance Rating seem to be pleasant in the days to come, however, the SMB segment and the small merchants and traders will have a tough time complying with it.  Such sections of the society would have to devote a pinching amount of time, effort, energy and resources to get on with it.

The 100% online taxation module is a new phenomenon for the society and is so much prone to errors. Errors of any kind [non-compliance, delays, inaccuracy] whether intentional or unintentional will have a direct hit on the scoring.

Black listing of dealers

The compliance GST score of a taxpayer will be placed in the public domain accessible by all and shall be updated regularly. It is being presumed that the GSTN will automatically derive the rating based on the above discussed parameters and also publish and rating update GST from time to time.

There will also be a provision to black list dealers, if the rating is below average/low, based on the following factors:

  • Default for continuously 3 months in ITC which has been reversed
  • Non-filing of returns for continuously 3 months
  • Continuous short reporting of sales beyond prescribed limits for a period of 6 months

The black listing would also be live and put on the public domain and buyers would abstain from such entities. Government wants to ensure, that if you deliberately and proactively do not tune yourself with the GST provisions timely, things should be tougher for you. If you want to get enough knowledge of this topic you can visit the

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