Concept of Compliance rating and Black listing under GST


GST Act introduces a new concept of Compliance Rating. Currently, there is no system of compliance rating under existing tax laws of India. GST compliance rating is a concept which has been introduced for the first time in our country. Now, every taxable person registered under GST shall be assigned a GST compliance rating score. The score will be based on his record of compliance with the provisions of the GST Act.

Every taxable person who is registered under GST irrespective of its nature of business or size of business or turnover, shall be assigned a GST compliance rating score.

Section 149 of the Central Goods and Services Tax Act, 2017 provides that every registered person shall be assigned a GST Compliance Rating Score which will be determined on the basis of parameters which will be prescribed.

Section 20 of IGST Act and Section 21 of UTGST Act stipulate that provisions of CGST Act, 2017 shall apply mutatis mutandis to IGST Act and UTGST respectively.

The compliance rating scores would be updated on periodical basis and would be intimated to the taxable person and also the information of which would be put in public domain.

Calculation of Compliance Rating

Compliance rating scores will be determined on basis of following factors:

  • Regular payment of taxes
  • Timely e-filing of GST returns
  • Matching of transactions of outward and inward supplies
  • Transparent Reconciliations
  • Cooperation in dealing with GST Department

A taxable person with higher rating may be given certain privileges while a lower rating may invite enhanced surveillance. The chances for scrutiny assessment will rise and dealers with low compliance rating or rating lower than prescribed will be black listed.

Black Listing of Dealers

The compliance rating score will be updated periodically and will be intimated to the taxable person and will be placed in the public domain. GSTN may be entrusted with the responsibility of determining rating scores based on parameters and will do the task of periodic updating and publication of rating in public domain.

The dealers will be black listed if they have low Compliance rating. The following may be the triggers for Black Listing:

  1. Continuous default for 3 months in ITC which has been reversed
  2. Continuous default in filing returns for 3 months
  3. Continuous short reporting of sales beyond prescribed limit for a period of 6 months

Since the compliance ratings would be placed in public domain, businesses or dealers would be able to get information about lesser complaint taxable person. A highly rated taxable person would be preferred over others. It will help to know who less complaint dealers are and it would be harmful in dealing with such dealers as it would cause loss of input credit from purchases with such dealers.

Benefits of GST Compliance Rating

GST Compliance rating will help to choose the most GST compliant dealer or vendor for business. Better ranked or rated taxpayers would have advantages over others by way of following benefits:

  • Enjoy trust of tax authorities and less chances of scrutiny
  • No locking up of otherwise allowable input credit
  • More business as it will make them best choice for buyers
  • Add to good governance aspects of organization
  • Reputation built up


This is a new concept and every taxable person registered under GST needs to be very careful while dealing with dealers who are black listed. Since, black listed dealers will not be able to declared details of outward supply and as consequence of non-filing of return of outward supply, recipient will not be able to take credit. The details of black listed dealers will be available on website and purchase department should be alert while purchasing from such dealers.

Hopefully, GST compliance ratings will bring a new culture which will not only ensure all compliances but will also result in avoidance of tax evasion and lesser tax disputes and litigation under GST regime.


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