Ranking of Suppliers on GST compliance from next Financial Year


Ranking of Suppliers on GST compliance: The Centre is working on a database of suppliers that will rank them on the basis of their goods and services tax (GST) compliance track record, credit history, transaction and supply history besides any past defaults. The mechanism could be brought in the upcoming vote-on-account and introduced from the next financial year.

“Businesses can choose which vendors are compliant and which are not so they will be able to ascertain the risk ahead of engaging in business with them,” a senior finance ministry official told.

The move will improve compliance among small suppliers and prevent blocking of input tax credit of large businesses due to default of suppliers.

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“We will start the rating process of suppliers by November and plan to formally introduce it in the budget,” the official said. “We intend to implement it from the next financial year.”

The rating will be based on seven broad parameters. The Central Board of Indirect Taxes & Customs (CBIC) is working on the fine print, which will be ready after consultation with the industry. Currently, a business can not claim input tax credit if their supplier does not file return or upload invoices on time, which blocks their capital. The industry had requested the CBIC to initiate the process of rating, saying it will help companies choose GST-compliant vendors.

Work on this started earlier this year but at that time data synchronisation was not complete. But with mandatory e-invoicing for small businesses, ongoing geo-coding and Aadhaar authentication, the CBIC will soon have complete updated data of suppliers, which will form the basis of the rating.

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“We will have all the relevant data ready by October end,” the official said. “We will start the process of analysis and rating from November end or December first week.”

The GST law already provides for compliance rating and thus no changes will be required in the law, the official added.

The industry had been demanding a GST compliance rating for vendors and had asked the CBIC to implement it in this year’s budget itself. However, lack of complete data synchronisation delayed the process.

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