PROPOSED ACCOUNTING SYSTEM UNDER GST:
89. Four different Major Heads of accounts would be required to be opened for classifying CGST, IGST, Additional Tax and SGST along with underlying minor heads and sub-heads, wherever required, to account for various taxes.
90. There is a need to standardize these accounting codes for all items covered under GST regime among all the States and UTs, since settlement of IGST would be based on centralized reporting. SGST will be accounted for by the States and credited to individual State Treasuries, through the existing system followed in each State. SGST will not be reflected in accounts of the Central Government.
91. There may be cases of mis-classification and erroneous scrolling under Major Heads of accounts which may lead to less or excess revenue settlements between the Centre and State(s). To deal with such transactions, detailed accounting procedures should be designed. It is recognized that it is IT system issue, and not an accounting issue. The debit from tax-payers account should result in auto-credit to respective accounts of Government of India and the concerned State Government. Except in case of remittance through any authorized bank including a non-agency bank (where the funds have to necessarily come to a designated account in RBI), there should not be any mix-up of the funds belonging to two governments.
92. The CGA has suggested the following in this regard:
a) Codal provisions of the DDO & PAO should be complied with for discharge of PAO’s role. The automation as proposed should conform to this basic requirement.
b) PAO is the sole authority for receipt, payment and reconciliation of accounts book with Bank Reconciliation statement (BRS).
c) Any compromise on this fundamental work flow may lead to legal complications in preparation of Finance Accounts / Appropriation Accounts which is constitutional mandate.
d) Each challan detail must be linked with one DDO and PAO and bank account.
e) As part of standard operating process, accounts classification should be done by the PAO in his books and no one else. Bank is not involved in classification of accounts.
93. The challan will reflect only the net tax paid amount along with related bifurcations of nature of tax liability, such as, Interest, Penalty, Fees, other charges, etc. Presently, the Tax Payment Challan information forms the basis of accounting and reconciliation between the banks, RBI, Tax authorities and Accounting authorities of the Centre/States/UTs. A list of sample tax accounting codes under GST is proposed in the table below:-
|
S. No.
|
Type of Tax Liability
|
Sample Accounting Code
|
|
1
|
CGST - Tax
|
00010001
|
|
2
|
CGST – Interest
|
00010002
|
|
3
|
CGST – Penalty
|
00010003
|
|
4
|
CGST – Fees
|
00010004
|
|
5
|
CGST – Other
|
00010005
|
|
6
|
IGST - Tax
|
00020001
|
|
7
|
IGST – Interest
|
00020002
|
|
8
|
IGST – Penalty
|
00020003
|
|
9
|
IGST – Fees
|
00020004
|
|
10
|
IGST - Other
|
00020005
|
|
11
|
SGST- Tax
|
00030001
|
|
12
|
SGST - Interest
|
00030002
|
|
13
|
SGST - Penalty
|
00030003
|
|
14
|
SGST – Fees
|
00030004
|
|
15
|
SGST – Other
|
00030005
|
|
16
|
Additional Tax – Tax
|
00040001
|
|
17
|
Additional Tax – Interest
|
00040002
|
|
18
|
Additional Tax – Penalty
|
00040003
|
|
19
|
Additional Tax – Fees
|
00040004
|
|
20
|
Additional Tax – Others
|
00040005
|
The actual accounting codes have to be finalized by CGA in consultation with CAG on the basis of proposals from Tax Authorities.
94. CGST, IGST and Additional Tax components will be accounted for under Consolidated Fund of India (CFI). Transfers of due IGST amount and Additional Tax to the States can thereafter be made there from as per the existing procedure.
95. The interest, penalty, fees or other charges, if any, under GST will need to be accounted for separately. Hence, they would be reflected under separate heads in the Tax Payment Challan.
96. The IT audit of the process flows and settlement of funds by the FPBs / Link cells with RBI will be conducted periodically by a CERT-IN empanelled agency selected by the office of Pr. CCA, CBEC, or by a designated authority of States/UTs so as to ensure correctness of revenue collections.
