Determinants and Benefits of Higher GST Compliance Rating

Published On: Sep 26, 2018Last Updated: Oct 14, 20234.5 min read

Introduction of GST on 01st July, 2017 was a sweeping tax reform in the Indian history. It brought along many new and essential notions such as mixed and composite tax, time of supply and the salient of all – GST compliance rating. All the businesses registered under GST are rated by the government based on their performance and these ratings will be the indicator of how much compliant they are with GST provisions.

The primary need to introduce the compliance rating score was to incentivize the taxpayers to comply with timely online GST return filing and other provisions of GST laws. The rating method will ensure that the registered taxpayers file timely GST return. The rating is done on a scale of 1-10 with the score of 1 indicating least compliance and score of 10 indicating highest compliance. There are several other factors on which the businesses are being rated.

Factors affecting compliance rating

  • Making timely payments

Once registered under GST, the entity is required to pay tax collected. How early one pays the tax? Is there any delay in the payment of taxes? These are all crucial factors to be taken into consideration. If there is a delay in payment, then it will affect the compliance score indicating that the business is not efficient in what it does and hence this affects the image of the business.

  • Cooperation with the GST authorities

To ensure that the GST system is well-implemented authorities might visit the place of business. Other cases may be for a person to visit the department or to respond to clarifications sought by the department. Depending on how one cooperates, the authority will rate the business as high or low. So, cooperation with the authorities is of great importance.

  • Filing returns in time

On-time GST return filing is, of course, an inevitable factor to for GST compliance rating. On-time and successful filing will not only benefit in compliance rating but it would also help to avail Input Tax Credit. Delay in filing returns will result in delayed input tax credit and eventually will affect the working capital for the business in addition to compliance score.

  • Timely reconciliation

Reconciliation is essential for filing returns. To avail the benefit of tax credit the buyer and seller need to file GSTR – 1 and GSTR – 2 forms respectively and the transaction of both the forms must match. Unless the details are matched the tax return cannot be filed and hence the chain of delays will follow.

  • Keeping up with other time limits

Apart from reconciliations and return filing, there are other processes which come with a time frame and one must adhere to those time frames. A delay will surely damage the score.

Why is it essential to maintain compliance rating score?

Adhering to so many regulations becomes burdensome but it is vital to maintain a compliance rating score. This score can impact business in many ways as it is placed on public domain by the GST Network.  A good compliance rating comes with its own perks, a few of which are mentioned below.

Benefits of maintaining high compliance score 

  • Decreased scrutiny

Being clear is always good and higher rating will reduce the chances of audit from GST authorities. The consistent high rating will indicate that all the regulations are implemented properly and things are in order. However, a low score will invite frequent audits and the GST compliance authorities frequently to the business place which is a bad sign for the business.

  • Better administrative priorities

One can anticipate their business to be taken on priority in GST ecosystem if a high compliance score is maintained. The refund one claims would be easily credited without any delays since the rating shows excellence in the dealings.

  • Pass a positive name

The higher rating score is self-sufficient and tells a lot about how well the business is doing. When the rank is high, people know that the business is excellent in its dealings and is stable. Thus, a higher rating builds a positive image of the business.

  • Gained business opportunities

People tend to trust businesses that show higher rankings. Maintaining a high compliance rating score will attract customers who are willing to do business with a competent company. With the taxpayers being able to see other taxpayers rating score, a high score can bring more business opportunities as customers prefer to prioritize doing business with the higher rating.

  • Competitive advantage

The compliance rating score acts as a differentiator between businesses in the same field. It is evident that business higher score will gain spotlight and hence a competitive edge over others in the same domain.

This is how GST compliance rating score is allotted and how it affects the business in many ways. Thus, it is highly advisable to observe the factors that affect compliance rating and especially, the time frames of online GST return filings and tax payments.

How can help you? is a premier legal service provider that helps business set-up across India followed by business protection in form of Intellectual Property registration and compliances in form of Government registrations and return filings. With the dedicated team of CA, CS and lawyers we aim at making the legal processes simple, affordable and transparent. To score high compliance rating, can help you with timely GST return filing. Simply write us at and our experts will get back to you.

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CS Prachi Prajapati
About the Author

CS Prachi Prajapati

Company Secretary with a forte in content writing! Started as a trainee, she is now leading as a Content Writer and a Product Developer on technical hand of The author finds her prospect to carve out a valuable position in Legal and Secretarial field.

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