Accounts and Records under GST – Sections 35 & 36 read with Rules 56–58
Background
The Goods and Services Tax framework is designed on the principle of self-assessment. Every registered person determines their own tax liability and claims input tax credit based on the records maintained. To support this mechanism, Sections 35 and 36 of the CGST Act, 2017, together with Rules 56 to 58 of the CGST Rules, prescribe the form, manner, and duration of maintaining books of account and records. These provisions ensure proper audit trails, verification of transactions, and transparency in the tax system.
Technical Aspects
Sub-Section 1 of Section 35 mandates that every registered person keep and maintain true and correct accounts of production, inward and outward supplies, stock, input tax credit availed, output tax payable and paid, and such other particulars as may be prescribed. The records are to be kept at each registered place of business. Sub-section (2) requires records to be maintained for every place of business separately, while sub-sections (3) to (5) empower the Commissioner to require special records for certain classes of persons, including transporters, warehouse operators, or any other notified category. Failure to maintain accounts can lead to best judgment assessment under Section 73 or 74.
Rule 56 prescribes detailed record-keeping requirements. Every registered person must maintain accounts of goods or services imported, exported, or under reverse charge, along with supporting documents like invoices, challans, and credit/debit notes. A stock register must show opening balance, receipts, supplies, losses, and closing balance for all goods, including raw materials, finished goods, and scrap. Separate records are required for advances, tax payable and paid, ITC claimed, and all issued or received documents.
Manufacturers must maintain monthly production accounts; service providers and works contractors must record inputs, services, and payments. Agents must keep authorisations and transaction details for each principal. Books may be manual or electronic, properly attested, serially numbered, and digitally authenticated.
In light of that, Rule 57 prescribes safeguards for maintaining electronic records. Proper back-ups are mandatory so that data can be restored in case of loss due to accident or natural cause. Taxpayers must produce records in printed or readable format upon demand, and provide access credentials, file details, and explanations of codes used for verification.
Whereas, Rule 58 lays down record-keeping requirements for warehouse operators, godown owners, and transporters who may not be registered under GST. They must enrol electronically on the GST portal using Form GST ENR-01 and maintain true and correct records of goods transported, delivered, or stored in transit. These records must include the GSTIN of the consignor and consignee, period of storage, and details of dispatch, movement, receipt, and disposal. The goods must be stored item-wise and owner-wise to facilitate physical verification by tax officers.
Section 36 provides that all records required under Section 35 and the related rules must be preserved for seventy-two months (six years) from the due date of filing the annual return for that financial year. If any proceeding, appeal, or revision is pending, or if investigation is initiated before the expiry of this period, records must be retained until one year after final disposal of such proceedings or for six years, whichever is later.
Conclusion
The combined reading of Sections 35 and 36 with Rules 56–58 reveals a detailed and structured compliance framework under GST. These provisions require each registered person to maintain transaction-wise accuracy, stock visibility, and traceability of every inward and outward supply. The emphasis on digital authentication and electronic back-up aligns with the broader GST objective of creating a transparent, technology-driven compliance ecosystem.
For taxpayers, particularly manufacturers, service providers, transporters, and warehouse operators, these requirements are not just procedural but form the evidentiary base for audits, refund claims, and input tax credit verification. Adherence to these rules ensures credibility of accounts, minimizes disputes during scrutiny, and reinforces the self-assessment system envisioned under GST.
About the Authors
Disclaimer: This blog provides general educational information about the Sections 23 and relevant notifications of the CGST Act, 2017. While every effort has been made to ensure accuracy, this content should not be construed as professional tax advice. GST laws are subject to frequent amendments, notifications, and judicial interpretations. For personalized guidance specific to your business circumstances, please consult with a qualified tax professional. The author assumes no liability for actions taken based solely on the information provided in this article.