Even minor mistakes in filing GST returns can lead to trouble from the GST department, which is something no business owner wants. To do so, you need to avoid these 10 mistakes which we are going to learn in this post. All business owners must file their Goods and Services Tax (GST) forms / returns correctly and on time in order to comply with GST provisions and avoid notices.
The complicated GST rules, on the other hand, can be hard to understand, which is why businesses often make mistakes when they file. To make sure you don’t make the same mistakes when filing your GST forms, read this post. It will help you in complying with GST laws and avoid making these top 10 most common mistakes.
Complying with GST provisions and Act is a crucial part of financial management for businesses. It not only makes sure that tax rules are followed, but it also makes running a business smooth and tension-free. It is important to know all the details of GST filing so that you don’t make mistakes that cost a lot of money and cause legal problems.
10 most common mistakes in GST Returns
1. Declaring Export turnover (zero-rated supply) under Nil rated or Exempt supply: You have to differentiate between “zero-rated supply” and “nil-rated supply” to file a right GST return. Zero-rated supply means export turnover with or without payment of tax and “nil-rated supply” is where the tax rate is zero as per the GST act. So, you should not declare any turnover in another column of the GST return else you may get notice and further, it will be difficult for you to claim a refund as the system won’t be able to do validation of your GST returns during that period.
2. Declaring export turnover as outward taxable supply: A big mistake can be declaring zero rated supply turnover in the outward taxable supply column which can affect your refund claim in future. Carefully check twice, thrice before filing GST returns.
3. Not compiling input tax credit with GSTR-2B or GSTR-2A: Before claiming any input tax credit in your GSTR-3B returns, check whether it is appearing in your GSTR-2B and whether your supplier has filed the returns (GSTR-1 and GSTR-3B both). This way you can avoid any notice of irregular availment of input tax credit from the department.
4. Not checking GSTR-2A properly before paying RCM liability: Sometimes, taxpayers pay RCM liability as per their books but on the other hand, their suppliers file returns with other tax liability. It is not a very big issue but you check the total amount paid under RCM liability in GSTR-3B returns should be more than GSTR-2A auto populated data.
5. Failure to file GST returns on time: File GST returns on time else you will have to pay interest and late fee which cannot be waived by any GST officer. This can cost your business and over burden you with unexpected expenses.
6. Not reconciling GSTR-1 and GSTR-3B and GSTR-9 returns data: It is very important that your monthly returns data should be correctly reported in GSTR-9 annual returns. Whatever mistakes you have made in Monthly GST returns, you have the option to rightly report in the GSTR-9 else it can attract tax authorities attention.
7. Incorrect classification of goods: It is very important to check the classification of each good you are manufacturing or trading. If the classification is incorrect, you may be penalized with tax along with interest and penalty. This can be detrimental to your business.
8. Ignoring GST Notices and Compliance: Always check your gst.gov.in dashboard whether any assessment order or notice is issued or not? You should always reply within time and comply with notices.
9. Not raising invoice properly for B2B and B2C: You go through Rule 46 of the CGST Rules 2017 and understand what an invoice should have. This way you can calculate correct turnover and declare the same in GST returns. You can also avoid yourself from being penalized.
10. Failure to Reconcile GST Data with Financial Statements: It is very important to match up GST data with financial records to make sure that tax returns are correct and that finances are clear. When GST reports and financial records don’t match up, it can be a red flag during audits and reviews. Businesses should set up strong bookkeeping procedures and use accounting tools to make the process easier.
Read more: Explained ineligible ITC with examples: Section 17(5) of GST
Conclusion
To avoid making common GST filing mistakes, you need to be careful, pay close attention to details, and have a good understanding of tax rules. Businesses can reduce risks, speed up their tax processes, and focus on driving growth and innovation in their industries by avoiding these 10 common mistakes and following best practices for GST compliance.
Go through the GST tutorial of filing various forms is detailed here – https://tutorial.gst.gov.in/userguide/registration/#t=manual.htm
Remember that compliance is not only the law, it’s also a smart business move that you need to make if you want to stay in business in today’s competitive market.
