Goods and Services Tax, or GST, was introduced to make taxation in India Simpler. Yet, many small or big businesses are battling compliance to this day. Government figures have reported a rise in GST demand notices due to repeated mistakes. As a business owner, you must avoid these mistakes to stay legally safe.
In this blog, let us discuss the most frequent GST errors and how to avoid them.
1. Not Meeting GST Return Due Dates
Most companies forget or overlook filing their GST returns. It is one of the most frequent errors. If you miss the due date of the return, you can be charged with late fees and interest. Delaying payment means you’ll need to pay higher interest.
Write down GST deadlines so you don’t forget. Remind yourself. If you see an accounting program, set reminders. Better yet, outsource to a tax officer who will file your returns on time.
2. Wrong or Mismatched Invoice Information
Sometimes, suppliers provide incorrect information in GST invoices or don’t match them with the buyer’s information. This results in mismatch errors in GSTR-2B or GSTR-3B. You then lose your input tax credit (ITC).
Manually verify every invoice before uploading. Utilize GST-friendly software that auto-verifies for errors and matches details in real time.
3. Claiming Input Tax Credit (ITC) Without Proper Backup
It is good to utilize ITC, but it has to be used correctly. All businesses utilize credit without documentation or before the supplier utilizes returns. This may result in notice or cancellation of ITC.
Utilize ITC only if:
- Your supplier has utilized GSTR-1
- Goods or services are received
- The invoice is reflected in your GSTR-2B
- You have a valid tax invoice
4. Disregarding GST Registration Rules
It’s common for businesspeople to forget GST registration once their sales grow. Some people feel that they will not require GST if they are conducting business inside their state. Some use different GSTINs for cheating or tax evasion. All these are dangerous steps.
Obtain GST registration as soon as your turnover crosses ₹20 lakh (or ₹10 lakh in particular special states). GST is unavoidable if you are selling through e-commerce websites, even if there is no turnover.
5. Filing NIL Returns Without Verification
The majority of companies file NIL returns only because they don’t want to waste time, even if there are genuine entries to be accounted for. That is dangerous. After a while, if the GST authorities catch you underreporting, you may get a notice with a penalty.
Always check sales, purchases, and ITC before filing. If the books are not recent, get your CA or accountant to go through them first.
6. Not Reconciling Books with GST Returns
Your books should reconcile with your GST returns. Businesses rarely reconcile every month. Longstanding differences cause significant issues, particularly during audits or loan approvals.
Reconcile GSTR-2B, GSTR-3B, and GSTR-1 on a monthly basis. Reconcile figures on Excel or GST software. Resolve mistakes prior to filing returns.
7. Ignoring E-Invoicing and E-Way Bill Rules
If your business has a turnover of over ₹5 crore, you must issue e-invoices for B2B transactions. And if you move goods worth over ₹50,000, you have to carry an e-way bill. Ignoring these mandates causes fines, and goods will be detained while in transit.
Check if your business must use e-invoicing or e-way bills. Utilize apps or software to create them in seconds without a last-minute rush.
8. GST Compliance for E-Commerce Sellers
Online sellers have extra rules to abide by. For instance, they need to register GST in every state where they sell, in case they are selling from their website. GST has to be followed even with a low business turnover when selling on platforms like Amazon.
E-commerce firms are also encountering problems in TCS (Tax Collected at Source) and data mismatch between platforms and their returns.
- Keep the platform’s monthly TCS reports.
- Match your sales reports with platform reports
- File GSTR-8 if you are an operator
- Sellers will receive GSTR-1 and GSTR-3B reconciliations with portal data.
9. Disregard of Government Notices or Reminders
Many businesses think that they can avoid or push back GST notices. But that is risky. Such notices may question, ask for extra tax, or even cancel your registration. Disregarding them will only worsen the condition.
If you receive a notice:
- Read carefully
- Respond before the deadline
- Seek assistance from a GST professional if you need to
10. Lack of Being Up-to-date with New Rules
GST rules change over time. The majority of changes come in cycles every few months. If you are unaware of new changes, you may end up unknowingly breaking the rules.
Subscribe to GST blogs and newsletters or see updates on GSTN or CBIC websites. Attend online webinars or ask your CA to give you monthly updates.
Why GST Compliance is Important
Thousands of companies have received GST notices over the last few months. Most of them were for simple mistakes such as incorrect ITC claims, default returns, or invoice mismatches. Large corporations were also fined because of a lack of compliance.
Final Thoughts
It is simple to avoid GST mistakes. But you have a process that needs to be set up. A small mistake today can become a big issue tomorrow. Here is a good solution. With the proper tooling and expert guidance, you can remain completely in line and concentrate on growing your business.
GST is an important thing. So, establish good habits, continue training, and don’t think lightly of even minor mistakes.