The 39th GST Council meeting approved a new facility called ‘Know Your Supplier’ (KYS). This facility is introduced to provide benefit to the recipient of goods or services under the Goods and Services Tax (GST) law. This article covers the definition of Know Your Supplier (KYS), how it has emerged and the benefits of the facility.
The press release explains that the ‘Know Your Supplier’ (KYS) facility will enable every registered person to obtain some necessary information about their suppliers.
Previously, the government wanted to implement the compliance rating system that gives a rating to the suppliers based on their accuracy in invoice uploading, regularity in return filing and compliance with the other law requirements. This rating system needs a separate mechanism to be established by the government.
The government believes that it is better to provide suppliers with information to the recipients so that they can make the best assessment of the suppliers before continuing to do business with them.
At the press meet after the 39th GST Council meeting, the Hon’ble Union Finance Minister explained that this facility was inspired by the ‘Know Your Customer’ (KYC) scheme. The KYC is a process where banks collect proofs to identify the existence and genuineness of their customers.
As of 16 March 2020, the date of the launch is not notified by the Council yet, but it is expected to launch soon. This facility might be made available to the taxpayers only after they log into the GST portal. This facility provides information about the existing suppliers as well as the proposed suppliers.
The taxpayer can get access to the authorised information submitted by suppliers at the time of GST registration or while making amendments to their GST registration. A user may be able to enter the GSTIN of the supplier available on his record to fetch further details about the regularity of GSTR-1 filing and so on. However, additional information on the functionality is yet to be notified by the Council.
The following are the benefits of this KYS facility:
- This facility might work as an information exchange module between the recipient and supplier.
- This facility will help in reducing the non-compliance by the suppliers.
- Once this facility is made available, the taxpayers can get some necessary information about the exisiting suppliers with whom they are doing business.
- Also, the taxpayer can get to know about a new supplier, once he goes through the supplier’s history regarding compliance with the law.
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