GST Compliance: Registration, Returns and Benefits

GST officials can levy penalties on unpaid taxes and take other punitive actions even when taxpayers inadvertently fail to comply with rules and regulations. Besides, any GST compliance proceedings can disrupt a business's flow, seriously affecting profitability and revenue. So, learning about and thoroughly practising GST statutory compliance in any business operation is essential. 

This article discusses what is GST compliance and shares a standard GST compliance checklist for your business. 

What is GST Compliance?

GST compliance is the compulsory practice of adhering to the GST Act, rules, and regulations specific to any business. These regulations vary significantly between industries, so the practical aspects of GST compliance must also consider the industry-specific variations in GST compliance guidelines. 

Broadly, we can segregate GST compliance into 5 categories. These are:

1. GST registration-related compliance 
2. Tax invoicing-related compliance 
3. GST returns filing related compliance 
4. Payment of collected tax to the government 
5. Compliance related to the maintenance of business records  

A company or individual business can be termed GST-compliant only when it adheres to every mandatory requirement per the GST guidelines specific to its line of business. 

Let us understand the concept of GST compliance with a simple business transaction. 

Scenario: M/s ABC Ltd is a readymade garment trader based in Kolkata. They supply a batch of semi-finished trousers to another trading company, M/s MNO Ltd, based in Patna. 

GST compliance for M/s ABC Ltd will require: 

• Registration-related requirement - both parties in the transaction must be GST registered and have valid GST identification numbers or GSTIN. 
• Invoice-related requirements - the supply invoice must include mandatory information, like the supplier's and the purchaser's GSTIN, description of items being supplied, HSN code of the items, supply quantity, per unit price, applicable CGST and SGST rates and place of supply.   
• Logistical requirement - If the transaction exceeds ₹50,000, M/s ABC must generate an e-way bill. 
• Returns-related requirement: The supplier must report the supply in its monthly filings of GSTR-1 (on or before the 11th day of the succeeding month) and GSTR-3B (on or before the 20th day of the succeeding month). 
• Transfer of collected GST—M/s ABC must also transfer the tax collected for the transaction to the government by filing GSTR-3B by the 20th of the succeeding month.
• Maintaining records—The supplier must also maintain records of all the documents related to the transaction, such as invoices, e-way bills, GST payments, etc., for at least 72 months. 

GST Registration Compliance

Registration-related compliance is the most basic requirement for complying with GST rules and regulations. GST registration is mandatory for any company engaged in manufacturing or trading goods with an annual turnover of more than ₹40 lakhs. The minimum turnover for compulsory GST registration is ₹20 lakhs for service-related businesses. 

Compliance with GST registration-related issues requires:

• Registration of the business in the GST portal as soon as the turnover touches the minimum threshold. 
• Obtaining a GST Identification Number (GSTIN). 
• Updating GSTIN-specific information accurately in the GST portal at regular intervals or as soon as a change occurs, such as office address, nature of business, etc. 

Benefits of the GST Compliance Rating

GST compliance rating is a concept similar to any performance ranking, and it is mentioned in Section 149 of the GST Act 2017. As per the Section, the Central Government has the legal authority to assess and rate every registered taxpayer based on their performance in complying with mandatory GST rules and regulations. Such a rating can be assigned irrespective of taxpayers' size and business nature. Rating may vary from one (1) to ten (10), where 10 implies the most GST compliant and 1 is the least compliant. 

Some of the unique benefits of introducing a GST compliance rating system are: 

• Companies with high compliant ratings will enjoy reduced chances of scrutiny by the tax authority. In case of inadvertent compliance issues, such taxpayers may get better concessions.  
• A high compliance rating will improve companies' business image within the GST ecosystem and give them a competitive edge over other suppliers in the market. 
• High ratings also help companies negotiate better deals with financial institutions and attract investors. 

However, despite several discussions on parameters and methodologies, the government has not yet rolled out a similar rating system based on GST compliance. Any specific timeline for introducing one is also not publicly available. 

Tax Invoice Compliance under GST

Compliance with tax invoice-related GST rules and regulations involves raising sales invoices for any supply of goods or services or both, including accurate information on,

• GSTIN of supplier and purchaser 
• Address including the state from which the supply is being made 
• Address including the state to which the supply is being made
• HSN code and description of items supplied  
• Rate of GST applicable to items 
• Quantity sold 
• Unit price of the items supplied 
• Total GST charged 

Accurate information in the supplier invoice helps to process input tax credit and avoid under or overcollection of GST. 

GST Return Compliance

Compliance with mandatory filing of GST returns involves monthly or quarterly (QRMP) filing of GSTR-1, GSTR-2B and GSTR-3B, along with annual submission of GSTR-9 (for turnover of more than ₹ 2 crore). A regular registered taxpayer must file 37 returns in a year. Taxpayers registered under the QRMP scheme must file GSTR-1, GSTR-2B and GSTR-3B quarterly.