Section 35 lists the records every registered person must keep and where. Unaccounted goods are treated as supplied and taxed; and the old requirement of an audit by a chartered or cost accountant has gone.
Key points
- Under section 35(1) of the CGST Act, 2017 a registered person must keep true and correct accounts of production, inward and outward supplies, stock, input tax credit and output tax at its principal place of business, and at each additional place for that place's accounts; electronic records are permitted.
- Owners or operators of warehouses and godowns, and transporters, must keep records of consignors, consignees and goods, whether or not registered (section 35(2)).
- The requirement in section 35(5) to have accounts audited by a chartered or cost accountant and file a reconciliation was omitted from 01.08.2021; the annual reconciliation statement (GSTR-9C) is now self-certified.
- Goods not accounted for are treated as supplied and tax is determined on them as if under section 73, 74 or 74A (section 35(6)), except goods lost, stolen or destroyed within section 17(5)(h).
The provisions
35(1)–(4)Accounts and records
Statutory text
(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of-
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed:
Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business:
Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed.
(2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed.
(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified therein.
(4) Where the Commissioner considers that any class of taxable person is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed.
*Enforced w.e.f. 1st July, 2017.
35(5)–(6)Audit omitted; tax on unaccounted goods
Statutory text
(5) 1[****]
(6) Subject to the provisions of clause (h) of sub-section (5) of section 17, where the registered person fails to account for the goods or services or both in accordance with the provisions of sub-section (1), the proper officer shall determine the amount of tax payable on the goods or services or both that are not accounted for, as if such goods or services or both had been supplied by such person and the provisions of section 73 or section 74 2[or section 74A], as the case may be, shall, mutatis mutandis, apply for determination of such tax.
1. Omitted -(5) Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.
Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.
By s. 110 of The Finance Act, 2021 (No. 13 of 2021). Brought into force w.e.f. 01.08.2021 vide Notification no.29/2021- C.T. dated 30th July, 2021.
2. Inserted by section 123 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
What it means
Sub-section (5) once required taxpayers above Rs. 2 crore turnover (the prescribed limit) to have their accounts audited by a chartered or cost accountant and to file a certified reconciliation. It was omitted by the Finance Act, 2021 from 01.08.2021; the reconciliation statement in Form GSTR-9C, filed under section 44 by taxpayers above Rs. 5 crore, is now self-certified.
Sub-section (6) treats goods or services not accounted for as supplied: the proper officer determines the tax "as if such goods or services had been supplied", applying sections 73, 74 or — from 01.11.2024 (Finance (No. 2) Act, 2024) — 74A as the case requires. Goods lost, stolen, destroyed, written off or given as samples are dealt with instead by blocking credit under section 17(5)(h).
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Is a GST audit by a chartered accountant still required?
- No. Section 35(5) was omitted from 01.08.2021; the annual reconciliation (GSTR-9C) is self-certified by taxpayers above Rs. 5 crore turnover.
- What happens if goods are not accounted for in the books?
- They are treated as supplied and tax is determined on them under section 35(6) CGST.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Rules 56 to 58 specify the records in detail and require electronic records to be backed up and producible. Sub-section (3) allows the Commissioner to require additional records from a notified class; sub-section (4) allows him to relax the requirements for a class that cannot keep them.