Under Goods and Services Tax (GST) regime, every taxpayer would be assigned a compliance rating based on the compliance record.
While, the GST law does not prescribe the parameters as yet, regularity in uploading the invoices, filing of returns and taxes may be the main criterion for rating the taxpayers. The ratings will be updated at periodic intervals and also will be put up in the public domain on the GST Network (GSTN) website as tax authorities intend to build peer pressure among tax payers to ensure compliance.
The rating system holds significance more so for taxpayers making zero rated supplies as will be granted only if compliance rating of supplier is not less than a particular score.
The SME sector will need to be vary of the fact that the large players would be watching the vendor’s compliance rating as they would want a seamless input credit system to work for them.