GST was introduced almost two years back in India with the “One Nation One Tax” motto. While most businesses and professionals have synced with this revolutionary tax system, some are still struggling with it. Moreover, the government is constantly trying to give relief to the businesses and professional by providing new updates. However, there is a list of DO’s and DON’Ts under GST in order to enjoy all the relief that the government is providing.
The content of this article contains the following topics:
1. Filing GST Returns in Time
To avoid notices from the government you should file your GST Returns in time. Moreover, late filing of your GST Return may also attract interest and penalties as may be prescribed.
2. Uploading Data in GSTR 1
While filing GSTR 1 you need to furnish various details. Once filed, the GSTR 1 cannot be amended. So, you have to be careful at the time of furnishing data to ensure that no mismatches in the data are found at the time of GST Reconciliation.
3. Maintaining Proper Documentation
Maintaining proper documents is a healthy practice even if your business does not fall under the GST audit criteria. Moreover, maintaining documents ensure smooth GST Reconciliation process. Some of the important document that should be maintained is the sales register, purchase register, payment challans, e-way bills etc.
4. Reconciling GST Returns with your Books of Accounts
Timely reconciling GST Returns with the books of accounts help a business to identify the errors or omissions if any. Moreover, this practice saves a lot of time, interest and penalties as this ensure that error or omission found are addressed in the subsequent month GST Return rather than year-end.
5. Reconciling E-Way Bills Issued with the Invoice details furnished in GSTR 1
Every business should carry out the practice of reconciling their e-way bills issued with that of invoice details under GSTR 1. Further, you may get a notice from the government in case of mismatch of invoice details. Moreover, this helps in smooth furnishing of annual GSTR.
6. Reconciliation Between GST Returns
Reconciliation between GST Returns not only helps in filing error-free Annual GST Return but also assist in doing GST audit. Furthermore, to get accurate Input Tax Credit you should reconcile your purchase register with your GSTR 2A.
7. Reverse-Charge Mechanism (RCM) Concept
You must stay updated about all the new notifications issued by the government regarding the reverse charge mechanism. Also, you must note that in case of reverse charge payments you can claim ITC.
8. Informing GST Authorities regarding a change in business
If there is any change in the details of business filled out during registration must be communicated to GST authorities. Moreover, you need to inform the GST Authorities 15 days prior to such change in the business. However, you need to submit an application for such change on the GST Portal along with all the prescribed documents.
9. GST Audit
When your business turnover exceeds 2 crores INR mark you should get your books of accounts audited by a CA or CMA. In addition to this, you need to submit audited GST Return together with audited reconciliation statements.
1. Paying GST under wrong head
You should be extra careful at the time of paying GST as you can make a mistake of paying GST under the wrong head. Further, GSTN does not provide inter-utilization of taxes wrong paid that leads to an increase in the working capital.
2. Categorizing Nil Rated Supplies as Zero-rated Supplies (Vice-versa)
Categorizing Nil Rated Supplies as Zero-rated Supplies and vice-versa is the most common error that you may commit. You should be cautious while furnishing the details in your GST Returns as you cannot claim ITC for Nil Rated Supplies
3. Forgetting Nil Return filing
You may sometimes forget to file your Nil Return. Forgetting to file GST nil return may hamper the flow of your subsequent return filing. Moreover, in some cases, the GSTN do not allow to file a return where previous GST returns are not furnished.
4. Applying Wrong Tax Rates
You should stay up to date regarding the new tax rates as the government keeps issuing new notifications regarding it. Further, at the time of issuing an invoice, you should also make sure that the tax rate charged is correct to claim correct ITC.
5. Unnecessary GST payment
You may sometime make unnecessary GST payment by not recognizing the reverse charge transaction. So you should identify whether the GST has to be paid by you or the recipient. In addition to this, it may also result in double payment of GST.
6. Neglect Paying Tax on Job-work goods after the expiry of the specified period
If you are a principal manufacturer then you are liable to pay tax with interest if the goods sent for job work are not handed back within the prescribed time period. However, if the moulds, dies, jigs and fixture are not returned within the specified time then it is not considered as sale. Thus, neither the principal nor job-worker is liable to pay any tax on them.
7. Claiming Ineligible ITC
You should never try to claim ITC which is ineligible to be claimed as you may get a notice from the GST authorities. Some of the common cases where ITC cannot be claimed are:
- Not paying the supplier within 180 days
- Using Input goods partly for the personal purpose
- Distribution of free sample
- Capital goods being sold
- Goods destroyed
If you follow the above list of do’s and don’ts under GST then you can remain GST compliant and avoid notices from the GST authorities. However, you may also use Masters India autoTax GST Software and e-way bill software to comply with GST procedures. This is an automated solution that reduces the chances of GST non-compliance to 99.99%.