How should professional dealers maintain financial records?

The mandatory records framework

Under the Income Tax Act, a business with turnover above prescribed limits must maintain books of accounts. For a numismatic dealer, the essential records are: a purchase register recording every note or coin acquired — date, source, description, price, and payment method; a sales register recording every note or coin sold — date, buyer, description, price, and payment method; a stock register showing current inventory at any point in time; and bank statements evidencing all business receipts and payments.

Under the GST law, a registered dealer must maintain additional records: a record of all outward supplies (sales with GST invoices); a record of all inward supplies (purchases with GST invoices received); and a GST input tax credit register. These records must be maintained for at least 72 months from the due date of the annual return.

GST invoicing requirements

Every sale by a GST-registered dealer must be supported by a tax invoice complying with Rule 46 of the CGST Rules 2017. A compliant numismatic dealer's invoice must include: the dealer's name, address, and GSTIN; the invoice number and date; the buyer's name and address (and GSTIN if the buyer is registered); a description of the goods — denomination, series, serial number prefix, condition; the quantity; the total value; the applicable HSN code (9705 for coins, 4907 for notes); the GST rate and amount; and the total amount payable.

An invoice that omits mandatory elements — particularly the HSN code or the correct GST rate — is not a valid tax invoice. The buyer cannot claim input tax credit on the basis of a defective invoice. The dealer faces compliance risk if their invoices are not compliant.

The cash transaction discipline

The most critical financial records discipline for a professional numismatic dealer is the complete elimination of cash transactions above ₹2 lakh. Section 269ST of the Income Tax Act makes cash receipts above this threshold a statutory violation carrying a penalty equal to the full amount. Every high-value transaction must be through banking channels — UPI, NEFT, RTGS, cheque. Bank records provide automatic transaction documentation. UPI provides instant receipts that are also digital evidence.

Below ₹2 lakh in cash, transactions are not prohibited. However, a pattern of repeated just-below-threshold cash transactions with the same party on the same or connected occasions may be aggregated and treated as a single transaction for Section 269ST purposes.

The business structure question

A sole proprietor dealing in numismatics operates under their own PAN. This is the simplest structure and appropriate for most dealers. Larger operations may consider forming a partnership or a Limited Liability Partnership — which provides some liability separation. A private limited company is possible but typically over-engineered for most numismatic dealers and brings additional compliance obligations. The choice of business structure should be made with professional tax advice based on the actual scale and nature of the operation.

Laws & authorities referenced in this chapter

Income Tax Act 1961 — §44AA (requirement to maintain books of accounts)

CGST Act 2017 — §35 (record keeping requirements for registered persons)

CGST Rules 2017 — Rule 46 (tax invoice format and mandatory elements)

Income Tax Act 1961 — §269ST (₹2 lakh cash transaction limit)

RBANMS Educational Institution v. B. Gunashekar — Supreme Court, 2025 — §269ST court-reporting direction