What is GST Compliance Rating

Simply put, the GST compliance rating is akin to a performance ranking of all registered taxable persons which tells you how compliant they are with respect to the GST provisions. This will be irrespective of nature, size, or turnover of the business.

Why is the GST Compliance Rating Introduced?

The idea behind this concept of tax administration is to compel people to be fully GST compliant and on time with uploading invoices and other necessary documents. Under GST, a person can claim input tax credit in GSTR-2 (return with purchase details for the month) only when the seller has also filed his GSTR-1 (return with monthly sales details), and the details on both these forms match or reconcile
with each other.
Now, under the current regime, businesses often delay return filing and payment of taxes to gain time. Continuing this practice under GST will result in delay in input tax credit across the chain and severely affect the working capital of businesses. The rating system will prevent the delay of credit for bona fide buyers due to the non-compliance of certain persons.