Section 35 – Accounts and Other Records
Section 35 of CGST Act, 2017 – Accounts and Other Records
Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Scope and Importance of Section 35
Section 35 mandates maintenance of proper books of accounts and records by registered persons under GST.
This section forms the backbone of:
- GST audit
- Scrutiny and assessment
- Investigation and recovery proceedings
Non-maintenance or improper maintenance of records can itself lead to penal consequences.
2. Statutory Requirement – Section 35(1)
Every registered person shall keep and maintain, at his principal place of business, true and correct account of:
- Production or manufacture of goods
- Inward and outward supply of goods or services or both
- Stock of goods
- Input tax credit availed
- Output tax payable and paid
- Such other particulars as may be prescribed
Records may be maintained:
- Manually, or
- Electronically
3. Place of Maintenance of Accounts
Accounts and records must be maintained at:
- Principal place of business, and
- Each additional place of business (if applicable)
Failure to maintain records at declared place may lead to adverse inference during inspection.
4. Accounts to Be Maintained by Specific Persons
4.1 Owners / Operators of Warehouse – Section 35(2)
Warehouse owners and operators must maintain records of:
- Goods stored
- Delivery and dispatch of goods
- Stock movement
4.2 Transporters – Section 35(2)
Transporters must maintain records of:
- Goods transported
- Consignor and consignee details
- Mode of transport
5. Records to Be Maintained as per CGST Rules
Section 35 must be read with the following rules:
- Rule 56 – Maintenance of accounts by registered persons
- Rule 57 – Generation and maintenance of electronic records
- Rule 58 – Records to be maintained by owner or operator of warehouse
These rules prescribe detailed formats and particulars.
6. Period of Retention of Records – Section 36 (Linked)
Although retention period is prescribed under Section 36, Section 35 operates subject to:
- Minimum retention of 72 months from due date of annual return
In case of:
- Appeal
- Revision
- Investigation
records must be retained for a longer period.
7. Electronic Records and Back-Up
Where records are maintained electronically:
- Proper back-up must be preserved
- Access must be provided to proper officer on demand
Failure to produce electronic records is treated as non-maintenance.
8. Consequences of Non-Maintenance of Accounts
If accounts are not maintained properly:
- Officer may determine tax liability to the best of his judgment
- Penalty may be imposed under Section 122
- Prosecution provisions may be attracted in serious cases
In audits, absence of records generally goes against the taxpayer.
9. Common Practical Lapses
- No separate stock register
- Mismatch between books and GST returns
- Improper ITC records
- No warehouse or job-work records
10. Related Provisions
- Section 36 – Period of retention of accounts
- Section 44 – Annual return
- Section 65 – Audit by tax authorities
11. Professional Tip
Do not treat Section 35 as a formality. Proper books of account are your first line of defence in GST audit, investigation and litigation.
Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Future amendments or judicial pronouncements may require revision.
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