It’s been almost 2 years since GST was introduced in India, and while most CAs and businesses have got the hang of this new tax system, some are still coping with the same. In addition to this, the Government is constantly rolling out new updates, adding to the complexity of things, and taxpayers need to always stay up-to-date, in order to ensure compliance and avoid notices being issued to them.
Here are some of the Dos and Don’ts that every GST taxpayer needs to know-
1. File Your GST Returns In Time
Unlike under the previous indirect tax laws in force, there are various returns and forms to be filed/submitted under GST. One of the most basic compliances that will help a business avoid interest, late fees, and notices would be to ensure that all GST returns are filed within their respective due dates.
2. Upload Accurate Data In GSTR-1
There are a lot of fields to be filled-in while filing the GSTR-1
return. The GSTN does not allow for the amendment of a return once it is filed. While this causes hardships to taxpayers, a little caution at the time of data-entry will ensure that no reconciliations and rectifications need to be done in the returns of later months.
3. Maintain Proper Documentation
This is a requisite for GST audit
. However, all businesses, even if they are not eligible for GST audit, should have a healthy practice of maintaining proper records under GST. This could mean purchase and sale registers, fixed asset registers, payment challans, e-way bills
, etc. In the event of a notice of scrutiny, or even at the time of closure of books of accounts, the reconciliation process will be much smoother if proper documentation is maintained.
4. Reconcile Your Returns With Your Books Of Accounts
This is a very important procedure that businesses need to be doing on a monthly basis and not waiting till the end of the year to reconcile the returns filed with their books of accounts. The practice of timely reconciliation would enable the identification of any errors and omissions. This can be can be amended in the return of a subsequent month rather than the end of the year, and would thus save interest, and penalties, if any.
5. Reconcile E-way Bills Issued With The Invoice Details Declared in GSTR-1
All taxpayers should match the e-way bills issued with data reported in the GSTR-1. This could be one of the causes of notices being issued to taxpayers, in the event the data does not match. The non-reconciliation of E-way bills data with GST returns would also cause hardships at the time of GST audit and preparation of the annual GST return.
6. A Comparison And Reconciliation Between Returns
A very beneficial exercise to taxpayers, which will help not only in the process of filing the annual return, but also in the case of a GST audit. Taxpayers should compare their GSTR-3B
returns filed, with GSTR-2A
and GSTR-1, and ensure that all data matches.
7. Correct And Amend Your Returns Before Filing The Annual Return
GST return filers should ensure that all pending amendments have been made to the monthly returns, on a timely basis. If this procedure is not carried out, it could lead to a difference between the returns filed during the year and the annual return. Hence, all reconciliations should be carried out and any discrepancy should be rectified before the annual return is filed.
8. Understand The Provisions of Reverse-Charge Mechanism
The Government keeps issuing notifications with regard to the provisions of Reverse-Charge Mechanism
. Every business should ensure that they stay updated with these provisions. Taxpayers should also note that input tax credit cannot be utilised when making reverse-charge payments and they can only be paid in cash.
9. Inform GST Authorities Of Changes In Your Business
All registered persons registered under the GST law should inform the GST authorities of any changes made in the particulars furnished with regard to their registration
. The authorities should be intimated within 15 days of such changes. The application should be submitted on the GST portal
along with the necessary documents.
10. Get Your GST Audit Done For Turnover Above 2 Crores
Every registered dealer whose turnover during a financial year exceeds Rs 2 crore has to get his accounts audited by a CA or a CMA. He has to submit his audited returns, along with his audited accounts and reconciliation statements.
1. Pay Tax Under The Wrong GST Head
Taxpayers sometimes make the mistake of paying tax under the wrong GST head, or paying interest under the tax head and so on. One should be extra cautious when making GST payments as the GSTN
does not allow inter-utilisation of taxes. Payments under the wrong tax heads would hence lead to an unfavourable working capital.
2. Categorise Zero-rated Supplies As Nil Rated Supplies And Vice Versa
This is a common error made by users who categorise zero-rated supplies
as nil-rated and vice versa. Zero rated supplies are export supplies and supplies made to an SEZ, whereas nil rated supplies are supplies on which the rate of tax is 0%. Input tax credit cannot be claimed on nil-rated supplies, and hence users should be careful while entering data in the GST returns.
3. Forget To File Your Nil Return
This is a very important aspect that taxpayers sometimes tend to ignore. If a business does not have transactions for any particular period, a user should not forget to file a NIL return for that period. This would also enable the smooth filing of subsequent returns as the GSTN does not allow returns to be filed in certain cases where past period returns have not been filed.
4. Apply The Wrong Tax Rates
The Government issues notifications regularly with the updated tax rates, as put forward by the GST council. All businesses need to stay updated with these rate changes and pay GST at the rates in force. There are also separate rates for certain goods and services that depend on whether input tax is claimed, or not. Persons issuing GST invoices should ensure that the correct tax rate is charged whenever an invoice is being issued.
5. Pay Tax If It’s To Be Paid Under Reverse Charge
This is for all businesses, on whose invoices GST is to be paid on reverse-charge. Such businesses need to identify if reverse-charge needs to be paid by the recipient, and not charge GST when issuing the invoice. This can save the double payment of tax, and the unnecessary hardship of depositing the tax, when the liability instead lies with the recipient.
6. Forget To Pay Tax On Goods Sent On Job-work (After The Expiry Of The Specified Period)
In the case of Job-work
, the principal manufacturer is liable to pay tax along with the applicable interest, in case goods sent on job-work are not returned within the specified time period (1 year in the case of inputs and 3 years in the case of capital goods). In the case of moulds and dies, jigs and fixtures, when disposed off as scrap, tax is supposed to be paid by the Job-worker, or by the Principal Manufacturer, incase the Job-worker does not have a GST registration.
7. Claim Ineligible Input Tax Credit
There are certain cases where input tax credit cannot be availed
such as – payments not made to suppliers within 180 days, inputs used partly for personal purposes, capital goods sold, free samples given to customers or business partners, goods destroyed, etc. Taxpayers need to stay updated with the provisions of input tax credit. Any wrongful availment of input tax credit could lead to notices being issued by the GST department.
8. Forget to Claim Transitional Credit
For those taxpayers who haven’t yet claimed their transitional credit due to a technical glitch, the Government has extended the due date to 31st March and 1st April for TRAN-1 and TRAN-2
forms respectively. Hence, users can still claim transitional credit from the pre-GST era up till the extended due dates.
These are some of the ways a tax filer can stay GST-compliant, and avoid notices from the GST department. It is always of prime importance that an enterprise’s statutory systems and dues are not neglected. This contributes to the overall health and success of the enterprise itself.
offers a FREE integrated tool for GST registered businesses to track and check their compliance level for GST Returns filed. Every GSTIN can now access the GST Health Check tool
to get the following result in an excel form:
Try out the GST health check tool and check your GSTIN’s health now!