Keep records of goods stolen or pay more tax

ACCORDING TO THE DRAFT GST RULES, TAXPAYERS ALSO CANNOT ERASE, OVERWRITE IN THEIR BOOKS OF ACCOUNT

Traders and businessmen are likely to end up paying higher tax under the new Goods and Services Tax (GST) regime if they are careless in maintaining detailed records of merchandise lost in transport, stolen or destroyed.

Records of free samples and gifts to consumers will also have to be maintained in details under the new tax regime that will kick in from July 1 and is touted as the biggest tax reform since Independence. Taxpayers also cannot erase, over-write in their books of account, according to the draft GST rules put out by the finance ministry. “Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries shall be scored out under attestation and thereafter correct entry shall be recorded,” it said.

Tax experts say the new rules will create an accounting nightmare as most of the smaller businesses are yet to use computers to record daily transactions and still rely on hand-written note books. “This may also pose as compliance challenge for small businesses who may be using readily available basic accounting software,” said Preeti Khurana of ClearTax.com, which helps traders compute taxes with its accounting software.

“The new draft rules require maintenance of trail of each deleted or edited entry, in electronic records,” she said. Where registers and other documents are maintained electronically, there must be a log of every entry edited or deleted. “Unless proved otherwise, if any documents, registers, or any books of account belonging to a registered person are found on any premises other than those mentioned in the certificate of registration, they shall be presumed to be maintained by the said person ,” the rules stated.