Indirect Tax Laws · Accounts and Records; E-way Bill

Accounts and Records under Section 35 of the CGST Act

Updated 5 October 2026 · Fact-checked

Section 35 requires every registered person to keep a true and correct account of production, inward and outward supplies, stock, input tax credit, and tax payable and paid, at the principal place of business and each additional place. Rule 56 adds details. Section 36 requires retention for 72 months from the annual return due date, longer if proceedings are pending.

Understand Accounts and Records under Section 35 of CGST Act

GST works on self-assessment. You declare your own tax, so the department must be able to verify your numbers later. Books and records are the evidence. Section 35 says what you must record. Rule 56 of the CGST Rules says how.

Under Section 35(1), a registered person keeps a 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; and other particulars prescribed. The accounts are kept at the principal place of business shown in the registration certificate. If the certificate lists more than one place of business, the accounts of each place are kept at that place. Records may be kept in electronic form, in the prescribed manner.

Section 35(2) goes beyond registered persons. The owner or operator of a godown or warehouse, and every transporter, must keep records of the consignor, consignee and other relevant details of the goods stored or transported. This applies whether or not they are registered.

Rule 56 fills in the detail. It covers accounts of imports, exports and reverse charge supplies with supporting documents, stock accounts, separate advance accounts, tax and ITC accounts with registers of invoices, credit notes, debit notes and challans, and names and addresses of suppliers and customers. It also covers storage premises, monthly production accounts for manufacturers, service-provider accounts, and separate works contract accounts. Rule 56 also has rules on correcting entries and on the authentication of electronic records.

Section 36 deals with retention. You retain books of account and other records until 72 months from the due date of furnishing the annual return for the year to which they relate. If you are a party to an appeal, revision or any other proceeding, or you are under investigation for an offence under Chapter XIX, you must retain the books for one year after final disposal of such appeal, revision, proceeding or investigation, or for the 72-month period, whichever is later.

Key rules to remember

Accounts under Section 35(1): Production + inward and outward supplies + stock + ITC availed + output tax payable and paid + other prescribed particulars; Kept at the principal place of business in the registration certificate, and at each additional place for that place's accounts.
Rule 56 stock account: Opening balance + receipts − supplies − goods lost, stolen, destroyed, written off or given as gift or free sample = closing balance; Covers raw materials, finished goods, scrap and wastage. Rule 56(4) applies to registered persons other than those paying tax under Section 10 (composition).
Rule 56 tax and ITC account: Tax payable (including reverse charge), tax collected and paid, input tax, ITC claimed, plus registers of invoices, credit notes, debit notes and challans; Do not carry over the composition exclusion of the stock account in Rule 56(4) to this account without reading the rule text. Rule 56(6) is framed for registered persons generally.
Rule 56 separate accounts: Advances received, paid and adjustments; works contract account; monthly production account (manufacturer); account of services supplied (service provider); Each of these is a separate record. Do not merge them into the general ledger.
Rule 56 particulars to keep: Suppliers' names and addresses + customers' names and addresses + full address of premises where goods are stored, including in transit; Rule 56(17) requires you to maintain the full address of every premises where goods are stored, including goods in transit. Goods found at an undeclared place without valid documents expose you to inspection, search and seizure (Section 67), detention or confiscation (Sections 129 and 130) and demand proceedings (Sections 73 and 74). Rule 56(17)-(18) does not itself deem those goods to be supplied.
Retention period (Section 36): Retain until 72 months from the due date of the annual return for that year; If you are a party to an appeal, revision or other proceeding, or under investigation for a Chapter XIX offence: retain for one year after final disposal of the appeal, revision, proceeding or investigation, or for the 72-month period, whichever is later.
Section 35(2) persons: Owner or operator of godown or warehouse, and every transporter: records of consignor, consignee and other relevant details; Applies irrespective of registration.
Form of records: Electronic form allowed; manual books must have numbered pages; entries are not erased or overwritten; Incorrect entries other than clerical ones are scored out under attestation, then the correct entry is made. Electronic records need a log of edits and deletions.

How to solve Accounts and Records under Section 35 of CGST Act questions

Use this method for any question on accounts and records. It keeps your answer in provision, facts, conclusion form.

1Identify who the person is: a registered person, a composition taxpayer, a manufacturer, a service provider, a works contractor, or a warehouse owner or transporter.
2Pick the right provision: Section 35 for what and where, Rule 56 for the detailed records, Section 36 for how long.
3State the place rule. Principal place of business is the default. Each additional place keeps its own accounts if it is listed in the registration certificate.
4List only the records that apply to this person. A person paying tax under Section 10 is outside the stock account in Rule 56(4); do not extend that exclusion to other records without reading the rule. Manufacturers add monthly production accounts. Works contractors add separate works contract accounts.
5Check the form of records: electronic form is permitted, manual pages are numbered, and entries are not overwritten.
6If the question involves time, compute retention. Find the annual return due date and add 72 months. If the person is a party to an appeal, revision or other proceeding, or is under investigation for a Chapter XIX offence, also add one year to the date of final disposal. Take the later date.
7Conclude with the consequence. For example, Rule 56(17) requires the full address of every premises where goods are stored, including in transit. Goods found at an undeclared place without valid documents expose you to inspection, search and seizure (Section 67), detention or confiscation (Sections 129 and 130) and demand proceedings (Sections 73 and 74).
8Write the answer in three parts: the rule, the application to the facts, and the conclusion.

Quickest way: Four-question check

When to use it: Use this for MCQs and short case questions with limited time.

Who? Identify the person and whether Section 10 composition applies.
What? Match the record to Section 35(1) or Rule 56 (stock, tax and ITC, advances, production, services, works contract).
Where? Principal place by default, additional place for its own accounts.
How long? 72 months from the annual return due date. If the person is a party to an appeal, revision or other proceeding, or under Chapter XIX investigation, take one year after final disposal if that is later.

Common mistakes in Accounts and Records under Section 35 of CGST Act

Counting the 72 months from the end of the financial year or from the date of filing the return.
Students remember '72 months' and skip the starting point.
Fix: Section 36 counts from the due date of furnishing the annual return for that year, not the financial year-end or the actual filing date.
Writing that retention is only 72 months even when an appeal is pending.
The proviso is overlooked.
Fix: A person who is a party to an appeal, revision or other proceeding, or under investigation for an offence under Chapter XIX, must retain the books for one year after final disposal of the appeal, revision, proceeding or investigation, or for the 72-month period, whichever is later.
Keeping all accounts only at the principal place when additional places exist.
Students read 'principal place' and stop.
Fix: Where the registration certificate lists more than one place of business, the accounts of each place are kept at that place.
Applying the stock account to composition taxpayers.
Students treat Rule 56 as uniform for all registered persons.
Fix: Rule 56(4) (stock account) applies to registered persons other than those paying tax under Section 10. Do not stretch this exclusion to other records; read the wording of each other sub-rule separately.
Thinking Section 35 applies only to registered persons.
The word 'registered person' dominates Section 35(1).
Fix: Section 35(2) covers every owner or operator of a godown or warehouse and every transporter, whether registered or not.
Overwriting or erasing a wrong entry in the books.
Students treat correction as an everyday accounting matter.
Fix: Under Rule 56, wrong entries other than clerical ones are scored out under attestation and the correct entry is made. Electronic records need a log of edits and deletions.

Worked examples

Example 1

Meridian Traders is registered in Delhi. Its registration certificate shows the principal place of business at Delhi and an additional place of business, a godown at Noida. All books are kept at Delhi. During inspection, the officer also finds taxable goods stored at a rented shed in Gurugram. The shed is not shown in the registration and no document covers the goods. Advise on the compliance position.

Show the solution

Provision: Section 35(1) requires accounts to be kept at the principal place of business. Where the certificate lists more than one place, the accounts of each place are kept at that place.
Application to Noida: The godown is a listed additional place. Under Section 35(1), the accounts relating to the Noida godown are kept at Noida. Meridian should arrange this rather than holding everything at Delhi.
Application to Gurugram: Rule 56(17) requires Meridian to maintain the full address of every premises where its goods are stored. The shed is not declared in the registration and the goods have no valid documents.
Consequence: Rule 56 does not deem these goods to be supplied. The goods and the records expose Meridian to inspection, search and seizure (Section 67), detention or confiscation (Sections 129 and 130) and demand proceedings for any tax found unpaid (Sections 73 and 74).
Conclusion: Meridian keeps Noida's accounts at Noida, should declare all places where goods are stored, and should expect enforcement action on the Gurugram goods.

Answer: Under Section 35(1), the accounts relating to the Noida additional place are kept at Noida. Meridian has not kept or declared the Gurugram premises as Rule 56(17) requires. The goods found there without valid documents expose it to seizure, detention or confiscation (Sections 67, 129, 130) and demand proceedings (Sections 73 and 74).

Example 2

Kavya Fabrics, a registered manufacturer, filed its annual return for FY 2024-25 and the due date for that return was 31 December 2025. In 2027 it receives a notice and files an appeal relating to FY 2024-25 transactions. The appeal is finally disposed of on 15 March 2032. Until which date must it retain the books and records for the subject matter of that appeal?

Show the solution

Provision: Section 36 requires retention until 72 months from the due date of the annual return for the year.
Step 1: The due date is 31 December 2025. Adding 72 months (6 years) gives 31 December 2031.
Step 2: Kavya is a party to an appeal. It must retain the books for one year after final disposal of the appeal, or for the 72-month period, whichever is later.
Step 3: One year after 15 March 2032 is 15 March 2033.
Step 4: Compare 31 December 2031 with 15 March 2033. The later date is 15 March 2033.
Conclusion: Records on the subject matter of the appeal must be kept until 15 March 2033.

Answer: Kavya Fabrics must retain the records pertaining to the subject matter of the appeal until 15 March 2033.

Exam tips

Examiners test the retention period with dates. Always compute from the annual return due date, show the 72-month date, then compare it with the one-year-after-disposal date.
In case scenarios, check whether the person is a composition taxpayer before listing the stock account under Rule 56(4).
Keep the Section 35, Rule 56 and Section 36 roles separate: what, how in detail, and how long. Quote section or rule numbers only for those three, plus Sections 67, 129, 130, 73 and 74 for enforcement consequences.
Look for traps in the facts: an undeclared storage place, an additional place of business, a transporter or warehouse owner, or a pending appeal.
In descriptive answers, write the rule first, then apply it to the facts, then conclude. Do not just list records.

Practice questions from Accounts and Records; E-way Bill

Accounts and Records under Section 35 of CGST Act in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Accounts and Records under Section 35 of CGST Act: frequently asked questions

What records must a registered person keep under Section 35 of the CGST Act?

You keep a true and correct account of production or manufacture of goods, inward and outward supplies of goods or services, stock of goods, input tax credit availed, output tax payable and paid, and other prescribed particulars. Rule 56 gives the detailed registers and accounts.

Where must books of account be kept under GST?

At the principal place of business shown in the registration certificate. If the certificate lists more than one place of business, the accounts of each place are kept at that place.

How long must you retain books of account under GST?

Until 72 months from the due date of furnishing the annual return for the year to which the records relate. If you are a party to an appeal, revision or other proceeding, or under investigation for a Chapter XIX offence, retain the books for one year after final disposal of the appeal, revision, proceeding or investigation, or for the 72-month period, whichever is later.

Can accounts be maintained electronically under GST?

Yes. Section 35 allows electronic form in the prescribed manner. Rule 56 requires electronic records to be authenticated by digital signature and requires a log of every entry edited or deleted. Manual books must have numbered pages.

Does Section 35 apply to transporters and warehouse owners?

Yes. Every owner or operator of a godown or warehouse and every transporter must keep records of the consignor, consignee and other relevant details of the goods stored or transported. This applies whether or not they are registered.