Taxation · Accounts and Records

Accounts and Records under Section 35 CGST

Updated 5 October 2026

Section 35 CGST requires every registered person to keep true and correct accounts of production, supply, stock, input tax credit, output tax and other prescribed details at the principal place of business, with all places declared in registration. Rule 56 prescribes the manner and further particulars of the records. Section 36 sets retention: 72 months from the annual return due date.

Understand Accounts and Records under Section 35 CGST

GST is a self-assessment tax. You calculate and pay the tax yourself, and the officer checks your figures later. To check them, the officer needs books and records. Section 35 of the CGST Act, 2017 is the provision that makes you keep them.

The rule is simple. Every registered person must keep, at the principal place of business, true and correct accounts 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 such other particulars as are prescribed. The prescribed particulars are in Rule 56 of the CGST Rules, 2017.

If you have more than one place of business, the proviso to Section 35(1) applies. Where more than one place of business is specified in your registration, the accounts relating to each place may be kept at the respective place. Keeping the books at the principal place is not itself a breach. Every place where you keep goods or books must be declared in your registration. Section 35(1) says the accounts are to be kept as prescribed. Under Rule 56, the accounts may be kept manually or electronically. If they are kept electronically, Rule 56 requires you to keep them in a manner that lets you produce them in a form the officer can read, when asked.

Some persons have extra duties. Under Section 35(2), an owner or operator of a godown or warehouse, and a transporter, must maintain records of the consigner, consignee and other details of the goods handled, as prescribed in Rule 56. This duty applies irrespective of whether the person is registered.

Audit of accounts is no longer a GST requirement. The audit duty under Section 35(5) was omitted by the Finance Act, 2021 with effect from 1 August 2021. Form GSTR-9C is now a self-certified reconciliation statement, not a statement certified by a CA or cost accountant.

How long you keep the records is the subject of Section 36. You keep the books and records for 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 other proceeding, or are under investigation, you keep the relevant records until one year after its final disposal, or for the 72-month period, whichever is later.

For exam answers, think of three questions: what to keep, where to keep it, and for how long. Answer the first two with Section 35 and Rule 56 and the third with Section 36, and you cover most questions.

Key rules to remember

Core duty under Section 35(1): Registered person keeps, at principal place of business, true and correct accounts of production, supply (inward and outward), stock, ITC availed, output tax payable and paid, and other prescribed particulars; State the list in full. Examiners give a mark for each item you name.
Place of keeping accounts: Principal place of business: main accounts and records. Where more than one place of business is specified in registration (proviso to Section 35(1)): accounts relating to each place may be kept at that place. All places must be declared in the registration; If you hold goods or books at a place not shown in registration, you breach the rule.
Rule 56 – manner of keeping: Under Rule 56, records may be kept manually or electronically; electronic records must be kept so that they can be produced to the officer in readable form. Section 35(1) only says the accounts are kept as prescribed; Rule 56 also requires details such as stock registers, records of goods received, and tax paid.
Retention period (Section 36): Later of: (a) 72 months from the due date of furnishing the annual return for the year concerned; (b) one year after final disposal of the appeal, revision or proceeding, where the person is a party to one; Section 36 sets the period. Section 35 and Rule 56 say what to keep and where. Always take the later date.
Extra duties for warehouse owners and transporters: Owner or operator of godown/warehouse and transporter: keep records of consigner, consignee and other prescribed details of goods handled, irrespective of whether registered (Section 35(2), Rule 56); The duty applies to these persons whether or not they are registered.
Audit of accounts (no longer required): Section 35(5) audit duty omitted from 1 August 2021; GSTR-9C is a self-certified reconciliation statement; Do not write that a CA or cost accountant must audit the accounts. The duty to keep records stays.

How to solve Accounts and Records under Section 35 CGST questions

Most questions give a short fact pattern about a registered person and ask what records to keep, where, or for how long. Use this order.

1Identify the person: normal registered person, person with multiple places of business, warehouse owner or transporter, or a person under composition.
2Quote the main rule: Section 35(1) and Rule 56 require true and correct accounts at the principal place of business.
3List the items to be kept: production, inward and outward supply, stock, ITC availed, output tax payable and paid, plus other prescribed particulars.
4Apply the place rule: accounts of each additional place of business may be kept at that place, and all places must be declared in the registration.
5Apply the manner rule: manual or electronic records are acceptable, but electronic records must be available in readable form.
6Add special duties if the facts call for them: warehouse or transport records under Section 35(2).
7State the retention period under Section 36: the later of 72 months from the due date of the annual return and one year after final disposal of any appeal or proceeding.
8Conclude clearly: say whether the person has complied or breached, and what he must do.

Quickest way: Three-question check: what, where, how long

When to use it: Use this for both MCQs and short written answers when you have two or three minutes.

For MCQs, eliminate options that give a wrong place. Records go at the principal place of business, accounts of other declared places may be kept at those places, and goods or books at an undeclared place are a breach.
Reject options that say records must be kept only in paper form. Electronic records are allowed.
Check the retention period. If an option says 72 months, confirm it runs from the due date of the annual return and not from the end of the financial year. If a proceeding is pending, pick the later date.
For written answers, use this format: Provision (Section 35, Rule 56, Section 36), Facts, Conclusion. Write each item of the list on a separate line for step marks.
End with one line of conclusion, for example: Hence Mr X has not complied with Section 35 as goods were stored at a godown not declared in his registration.

Common mistakes in Accounts and Records under Section 35 CGST

Saying records are to be kept only at the principal place of business.
The section opens with the principal place, so students stop there.
Fix: Add that where there is more than one place of business in the registration, the accounts of each place may be kept at that place, and every place is declared in registration.
Counting the 72 months from the end of the financial year.
Students link records to the accounting year.
Fix: Count from the due date of furnishing the annual return for the year to which the records relate.
Forgetting the extended retention when proceedings are pending, or treating it as replacing the 72 months.
Students memorise only the 72-month rule, or only the one-year-after-disposal rule.
Fix: Under Section 36, keep the records until the later of 72 months from the annual return due date and one year after final disposal of the appeal or proceeding.
Leaving out ITC availed and output tax from the list of accounts.
Students remember only stock and supply because they sound like ordinary books.
Fix: Remember the list as: production, supply, stock, ITC, output tax, other particulars.
Believing manual books are mandatory or electronic books are not valid.
Students assume older practice applies.
Fix: State that Rule 56 allows either manner, as long as electronic records can be produced in readable form. Section 35(1) only requires the accounts to be kept as prescribed.
Ignoring warehouse owners and transporters.
Students think only suppliers keep records.
Fix: Whenever the facts mention storage or transport of goods for others, add their duty under Section 35(2) to maintain consigner and consignee records, whether or not they are registered.
Writing that accounts must be audited by a CA or cost accountant under Section 35(5).
Students use old notes written before the 2021 amendment.
Fix: State that Section 35(5) was omitted from 1 August 2021 and GSTR-9C is now a self-certified reconciliation statement.

Worked examples

Example 1

M/s Alpha Traders, a registered person, has its principal place of business in Pune and a godown in Nashik that is declared in its registration. The accountant keeps all books of both places at Pune. Is this in order under Section 35 CGST?

Show the solution

Provision: Section 35(1) requires a registered person to keep true and correct accounts at the principal place of business.
The proviso to Section 35(1) says that where more than one place of business is specified in the registration, the accounts relating to each place may be kept at the respective place. It is permissive.
Facts: The Nashik godown is a declared place of business. Pune is the principal place of business, where all the books are kept.
Conclusion: Keeping all the books at Pune, the principal place, is in order. The practice would be a breach only if goods or books were held at a place not declared in the registration.

Answer: Yes, it is in order. All books are kept at Pune, the principal place of business, and the Nashik godown is a declared place of business. The Nashik accounts may be kept at Nashik, but keeping them at Pune is not itself a breach.

Example 2

Beta Ltd., a registered manufacturer, filed its annual return for the financial year 2024-25 on the due date, 31 December 2025 (assuming no extension of the due date). State until when it must keep the books and records for that year, assuming no appeal or proceeding is pending. What changes if an appeal on that year is still pending on the last day of that period?

Show the solution

Provision: Section 36 requires records to be kept for 72 months from the due date of furnishing the annual return for the year concerned.
Due date: 31 December 2025, assuming no extension of the due date.
Add 72 months, which is 6 years: 31 December 2031.
Pending proceeding: where the person is a party to an appeal or proceeding, the records must be kept until the later of 72 months from the due date and one year after final disposal of the appeal or proceeding.
If the appeal is still pending on 31 December 2031, the records must be kept until one year after its final disposal. That date will necessarily fall after 31 December 2031.

Answer: Assuming no extension of the due date, and with no proceeding pending, Beta Ltd. must keep the records until 31 December 2031. If the appeal is still pending on 31 December 2031, it must keep them until one year after final disposal of the appeal, which will necessarily fall after 31 December 2031.

Exam tips

Write the list of items under Section 35(1) in full. Each item can carry a mark in a 5-mark answer.
Name Section 35 and Rule 56 for what and where, and Section 36 for how long. State the 72-month period with its starting point.
In case-study questions, check the place of business first. Most traps involve an undeclared or additional place.
For MCQs on retention, watch the starting point (due date of annual return) and the words 'whichever is later' with one year after disposal of proceedings.
Do not mention audit under Section 35(5) as a current duty. It was omitted from 1 August 2021.
Close every written answer with a one-line conclusion on compliance or breach. Do not leave the facts unlinked to the rule.

Practice questions from Accounts and Records

Accounts and Records under Section 35 CGST: frequently asked questions

What accounts must a registered person maintain under GST?

A registered person must keep true and correct accounts of production or manufacture, inward and outward supply of goods or services, stock of goods, input tax credit availed, and output tax payable and paid. Other particulars are prescribed in Rule 56. These are kept at the principal place of business.

Where are the records kept if I have more than one place of business?

The main accounts are kept at the principal place of business. Where more than one place of business is specified in your registration, the accounts relating to each place may be kept at that place. Every such place must be declared in the registration.

Can accounts be kept electronically under Section 35?

Yes. Section 35(1) requires the accounts to be kept as prescribed, and Rule 56 permits manual or electronic records. If you keep them electronically, you must be able to produce them in readable form when an officer asks.

For how long must records be retained under GST?

Section 36 requires you to keep records for 72 months from the due date of furnishing the annual return for the year concerned. If you are a party to an appeal or other proceeding, you keep them until the later of that date and one year after the final disposal of the appeal or proceeding.

Is audit of accounts still required under GST?

No. The audit duty under Section 35(5) was omitted by the Finance Act, 2021 with effect from 1 August 2021. GSTR-9C is now a self-certified reconciliation statement.