# Manner of Maintaining Accounts and Records

GST allows flexibility in how records are kept, but builds in integrity safeguards so that data cannot be tampered with.

## The Rules

1. Manual or Electronic — Records may be kept in either form. Electronic records must be authenticated by a digital signature.

2. Back-up — Proper back-up must be maintained so that data can be restored in case of destruction.

3. No Erasing or Overwriting — Entries cannot be erased, effaced, or overwritten. Incorrect entries must be scored out under attestation and the correct entry recorded.

4. Audit Trail — For electronic records, any change or edit must leave an audit trail showing original value, modified value, user, and timestamp.

5. On-Demand Access — Records (together with passwords, encryption keys and codes) must be furnished to the proper officer when demanded.

## Why These Rules Matter

Without the no-overwriting rule and audit trail, taxpayers could 'edit history' after the fact and defeat verification. The on-demand password rule ensures that encryption cannot be used as a shield against assessment.

Worked example

### Example 1

Example — Audit Trail

A company uses Tally with audit trail enabled. In March, an invoice of ₹ 1,00,000 was recorded. In June, the user changes it to ₹ 90,000. Tally retains: the original ₹ 1,00,000, the new ₹ 90,000, the user who made the change, and the timestamp. This is GST-compliant. If the audit trail had been disabled, the change would breach the rules.

⚠️ Common exam mistakes

Erasing wrong entries instead of scoring them out under attestation.
Storing electronic records without audit trail — non-compliant.
Refusing to share passwords/keys with the proper officer claiming confidentiality.
Not keeping a verifiable back-up — risk of being unable to restore records on inspection.

Reference:

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