Accounts and Records
AI-assisted · review in progress · last updated 25 July 2026 · jump to quick revision
In 30 seconds
- Chapter VIII of the CGST Act (Sections 35–36) and Rules 56–58 govern accounts and records — remember PAWS-72: Places, Accounts, Who, Safeguards, 72-month retention.
- Every registered person keeps true and correct accounts at the principal place of business (each place, if there are multiple); warehouse/godown owner-operators and transporters must keep records even if unregistered.
- Six general heads under Section 35(1), plus role-specific extras under Rules 56/58 — agents per principal, manufacturers monthly with waste, transporters branch-wise, warehouses item-wise and owner-wise.
- Manual records need serial-numbered volumes; electronic ones need digital signature, backup, on-demand production, password disclosure and an edit/delete log — neither mode is mandatory.
- Failure to account means the goods/services are deemed supplied (Sections 73/74/74A apply); retention is 72 months from the annual-return due date, extended for appeal or investigation records.
Based on GST law as on 30.04.2025 (May 2026 exams onwards). Section numbers are CGST Act unless stated.
How the chapter fits together
Accounts and records exist because GST is a self-assessment regime — the department verifies compliance through documentary scrutiny, not physical control. Chapter VIII of the CGST Act (Sections 35 and 36) and Chapter VII of the CGST Rules (Rules 56–58) govern the area; Section 20 of the IGST Act applies these provisions to IGST, and State GST laws carry parallel provisions.
Memory hook — “PAWS-72”:
- Places — PPoB (plus additional places of business, if any) →
- Accounts — what to maintain (six general heads) →
- Who — role-specific record-keepers (agent, manufacturer, service provider, works contractor, custodian/C&F, warehouse, transporter) →
- Safeguards — the manner of maintenance (manual/electronic) →
- 72 — months of retention.
| Provision | Topic | Crux |
|---|---|---|
| S.35(1) | General duty | Registered person: true and correct account at PPoB, 6 heads |
| S.35(1) proviso 1 | Multiple POB | Each place’s accounts kept at that place |
| S.35(1) proviso 2 | Electronic mode | May maintain electronically, as prescribed |
| S.35(2) | Warehouse/transporter | Consigner/consignee details — even if unregistered |
| S.35(3) | Commissioner ADDS | Notify a class → additional accounts/documents |
| S.35(4) | Commissioner RELAXES | Alternative manner permitted, reasons recorded in writing |
| S.35(6) | Failure | Deemed supply; S.73/74/74A mutatis mutandis |
| S.36 | Retention | 72 months from annual-return due date |
| R.56 | What and where | Person-specific records; place of maintenance; presumptions |
| R.57 | Electronic records | Safeguards for records kept electronically |
| R.58 | Enrolment + records | ENR-01; transporter branch-wise; warehouse item-wise and owner-wise |
| S.20 IGST Act | Applicability | CGST accounts-and-records provisions apply to IGST |
Who maintains, what, and where — Section 35
Section 35(1): every registered person must keep a true and correct account at the principal place of business of six general heads, (a)–(f):
- Production or manufacture of goods,
- Inward and outward supply,
- Stock of goods,
- Input tax credit availed,
- Output tax payable and paid, and
- Other prescribed particulars.
The riders that complete the picture:
- Multiple places of business (proviso 1): the accounts of each place are kept at that place — not consolidated at the PPoB.
- Electronic mode (proviso 2): records may be maintained electronically, as prescribed. There is no prescribed format; manual or electronic — electronic is not mandatory. Electronic records must be accessible at every related place of business.
- Section 35(2): the owner or operator of a warehouse/godown and every transporter must maintain records of consigner/consignee details — irrespective of whether registered or not (the unregistered enrol via Form GST ENR-01).
- Presumption (R.56(7),(10)): documents/accounts found at premises other than those declared are presumed to belong to the registered person unless proved otherwise; and if taxable goods are found at an undeclared storage place without valid documents, they are deemed supplied and the proper officer determines the tax.
Place of business [Sec 2(85)]
Three-limbed inclusive definition: (a) a place from where business is ordinarily carried on — including a warehouse, godown or any other place where goods are stored, supplied or received; (b) a place where books of account are kept; (c) a place where business is carried on through an agent. A mere book-keeping place or an agent’s place qualifies.
Principal place of business (PPoB) [Sec 2(89)]
The place specified as the principal place of business in the certificate of registration — determined by the certificate, not by the volume of business done there.
Other definitions the examiner draws MCQs from:
| Term | Crisp meaning | Trap / keyword |
|---|---|---|
| Commissioner [2(24)] | Commissioner of central tax | Includes Principal Commissioner and Commissioner of integrated tax — two designations |
| Common portal [2(26)] | GST electronic portal per Sec 146 | Used for ENR-01 enrolment |
| Invoice / tax invoice [2(66)] | Tax invoice per Sec 31 | Cross-refers Chapter 10 |
| Taxable supply [2(108)] | Supply leviable to tax | Exempt supply ≠ taxable supply |
| Taxable person [2(107)] | Registered or liable to be registered (Sec 22/24) | “Liable to be registered” also counts |
| Registered person [2(94)] | Registered under Sec 25 | Excludes UIN holders |
| Proper officer [2(91)] | Commissioner, or officer assigned that function by the Commissioner | Function-specific, not a fixed designation |
| Tax period [2(106)] | Period for which the return is to be furnished | Linked to tax-period-wise registers |
| Voucher [2(118)] | Instrument with an obligation to accept it as consideration; goods/supplier identity on the instrument or in related documentation | Identity need not be on the instrument itself |
| Conveyance [2(34)] | Vessel, aircraft, vehicle | Inclusive — not road-only |
| Works contract [2(119)] | Contract for building/construction/…/commissioning of immovable property involving transfer of property in goods | Restricted to immovable property (unlike old VAT/ST) |
Person-specific records — Rules 56 and 58
Agent [Sec 2(5)]
Factor, broker, commission agent, arhatia, del credere agent, auctioneer, mercantile agent — one who carries on the business of supply or receipt of goods/services on behalf of another. Inclusive list, not exhaustive; covers both supply and receipt.
Manufacture [Sec 2(72)]
Processing of raw material or inputs resulting in a new product with a distinct name, character and use — all three elements are needed, not any one.
| Who | Rule | Extra records |
|---|---|---|
| Registered person (general) | R.56(1),(3),(5),(6) | Imports/exports · RCM documents · advances · supplier/recipient names · storage address — undeclared storage without documents → deemed supply |
| Agent | R.56(11) | 5 particulars, kept separately for each principal |
| Manufacturer | R.56(12) | Monthly production accounts incl. waste and by-products |
| Service provider | R.56(13) | Quantitative details of goods used · input services · services supplied |
| Works contractor | R.56(14) | Separate accounts — 5 particulars incl. names, payment, suppliers |
| Custodian / C&F agent | R.56(17) | True and correct records; produce on demand |
| Transporter | R.58(4)(a) | Goods transported, delivered and in transit + consignor/consignee GSTIN — for each branch |
| Warehouse owner-operator | R.58(4)(b),(5) | Dispatch, movement, receipt, disposal; storage item-wise and owner-wise; facilitate inspection |
Two carve-outs to hold on to:
- Composition supplier: exempt from the stock-of-goods account and the tax-details account under R.56(2) and (4) — only these two; the other general records under S.35(1)/R.56(1) still apply. A classic MCQ.
- Enrolment (R.58(1)–(3)): an unregistered warehouse owner-operator or transporter obtains a unique enrolment number by filing Form GST ENR-01 electronically on the common portal; once enrolled in any State/UT he is deemed enrolled in all; details can be amended; and he is not eligible to use a GSTIN thereafter.
Manner of maintenance and corrections
The manner comes from the 2nd proviso to Section 35(1) read with R.56(7)–(9),(15),(16),(18) and R.57. Manual and electronic are equally valid — neither is mandatory — but each carries its own safeguards:
- Manual — books kept in serially numbered volumes.
- Electronic — authentication by digital signature; proper backup and restoration; production on demand in hard copy or electronic format; disclosure of passwords/codes/access information plus a sample print copy on demand; and a log of every edit or deletion.
- Corrections — no erasure, effacing or overwriting. An incorrect entry (other than clerical) is scored out under attestation and the correct entry recorded thereafter; clerical errors need not be scored out under attestation.
Document [Sec 2(41)]
A written or printed record and an electronic record (per Sec 2(t) of the IT Act, 2000). Trap: it does include electronic records.
Failure, Commissioner’s powers and retention
Failure — Section 35(6): if a registered person fails to account for goods or services, the proper officer determines tax on the unaccounted goods/services as if they were supplied by him; Sections 73/74/74A apply mutatis mutandis; and it is subject to Section 17(5)(h) (blocked ITC on goods lost, stolen, destroyed, written off, gifted or given as free samples). Chapter 11 prescribes no standalone penalty amount — the general demand and penalty provisions of those sections do the work.
Commissioner’s twin powers — opposite directions:
- S.35(3) — ADD: notify a class of taxable persons to maintain additional accounts or documents.
- S.35(4) — RELAX: where a class cannot comply, permit an alternative manner, with reasons recorded in writing.
Retention — Section 36: books and records are kept for 72 months from the due date of furnishing the annual return for the relevant year — not the filing date, not the FY end, not the transaction date. Proviso: a person who is party to an appeal/revision/other proceedings (before the Appellate or Revisional Authority, Tribunal or Court) or under investigation for an offence under Chapter XIX retains the records pertaining to the subject matter of that proceeding for 1 year after final disposal or 72 months — whichever is later.
| Period | Event | Where |
|---|---|---|
| 72 months from annual-return due date | General retention of books/records | S.36 |
| 1 year after final disposal or 72 months — later | Extended retention (appeal/revision/proceedings/Ch XIX investigation; subject-matter records only) | S.36 proviso |
| Monthly | Manufacturer’s production accounts incl. waste/by-products | R.56(12) |
| On demand | Production of electronic records/passwords; facilitating physical verification | R.56(9),(16); R.58(5) |
- Mixing up S.35(3) and S.35(4) — (3) the Commissioner ADDS accounts for a notified class; (4) he RELAXES the manner where a class cannot comply, with reasons recorded in writing.
- Treating PPoB [2(89)] and place of business [2(85)] as the same — PPoB is the specific place named in the registration certificate; place of business is the broad 3-limbed inclusive concept.
- Counting retention from the filing date, FY end or transaction date — it runs from the due date of the annual return; the extended period is “whichever is later” of 1 year after final disposal or 72 months, and covers subject-matter records only.
- Equating registered person [2(94)] with taxable person [2(107)] — registered person excludes UIN holders; taxable person also covers those merely liable to be registered.
- Believing electronic records are compulsory — manual and electronic are equally valid; manual needs serial-numbered volumes, electronic needs digital signature + backup + on-demand production + password disclosure + edit/delete log.
- Letting an enrolled transporter or warehouse operator quote a GSTIN — the ENR-01 unique enrolment number is the substitute; once enrolled, he is not eligible to use any GSTIN.
- Merging S.35(6) failure-to-account with R.56 undeclared storage — both end in deemed-supply tax determination by the proper officer, but the triggers are distinct (non-accounting vs undeclared storage without valid documents).
- Scoring out clerical errors under attestation — only non-clerical incorrect entries need scoring out under attestation; clerical errors are excepted.
Quick revision cards
Who must maintain accounts and records?
Six general heads under Sec 35(1)?
Where are accounts kept?
Retention period?
Composition supplier's relaxation?
Form GST ENR-01?
Manufacturer's special record?
Agent's records rule?
How is a wrong entry corrected?
Consequence of failure to account (s.35(6))?
Commissioner's twin powers?
PAWS-72?