Since GST regulations do not allow for amending a return once filed, it is important to ensure accuracy during the initial filing of Goods and Services Tax (GST) returns. Taxpayers must exercise diligence to avoid future complications. Filing GST Returns can be a complex process, requiring careful attention to every detail entered on the GSTN portal, as errors cannot be reversed. It is essential to be aware of common mistakes and make a conscious effort to avoid them. Below, we outline some of the most frequent errors taxpayers should steer clear of while filing GST returns.
Common Mistakes to Avoid During GST Return Filing
The following list highlights the typical errors, omissions, or oversights that GST-registered taxpayers in India might encounter.
-Registering the Wrong Mobile Number and Email ID
Always register your personal mobile number and email ID on the GST portal. This ensures you directly receive all communication from the GST department. Using a practitioner’s or third-party contact may lead to missed updates and potential issues.
-Failure to File Nil Returns
Taxpayers often believe that if there are no transactions during a tax period, GST returns are not required. However, even for periods with no transactions, filing a Nil GST return is mandatory to avoid penalties.
Note: Non-filing of a return for one month blocks the filing of subsequent returns.
-Not Displaying GST Number at Business Premises
Every registered taxpayer must display their GSTIN on the business’s name board and registration certificate at the premises. Failure to do so is a legal violation and may result in penalties.
-Non-Filing of GST Returns
Some businesses register under GST but fail to file returns regularly. This leads to compounding penalties over time, making compliance more difficult.
-Non-Filing of Final Return (GSTR-10)
If your GST Registration is surrendered or canceled, filing the final return (GSTR-10) is mandatory within three months of cancellation. Failure to do so attracts penalties and interest.
-Not Understanding Reverse Charge Mechanism (RCM)
Taxpayers often misunderstand RCM provisions, leading to non-payment or double payment of GST on applicable goods and services. It is crucial to identify the transactions subject to RCM.
-Claiming Incorrect Input Tax Credit (ITC)
Ensure ITC claims are in line with Section 17(5) restrictions. Incorrect claims lead to reversal along with interest penalties.
-Not Reconciling ITC with GSTR-2A
Regular reconciliation of ITC with GSTR-2A helps identify suppliers who have not filed returns, preventing incorrect claims.
-Failure to Reverse Ineligible ITC
Reversal of ITC is required in cases such as:
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Goods/services used for personal purposes.
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Capital goods sold.
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Free samples, destroyed/lost goods.
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Non-payment to suppliers within 180 days.
-Late Filing of GST Returns
Late filing attracts interest on dues and late fees. Filing returns within the prescribed timeline is essential to avoid such penalties.
-Non-Filing of Annual Return (GSTR-9)
All registered taxpayers, even those with canceled GST numbers, must file an annual return. Periodic government relief for small taxpayers should be considered.
-Failure to File LUT for Exports
Exporters must file a Letter of Undertaking online via GST RFD-11 to export goods or services without IGST payment.
-Omitting Additional Place of Business in Registration
Taxpayers must update their GST registration certificate when they begin business activities at additional locations.
-Ignoring Document Identification Number (DIN) on Notices
Verify the authenticity of GST notices via the Document Identification Number (DIN) on the CBIC website before responding.
-Missing ITC for Unclaimed Invoices
You can claim missed ITC for any invoice up to the filing date of the September GST return of the next financial year or the annual return filing date, whichever is earlier.
-Mismatch Between GST Returns and ITR
Ensure consistency between income tax returns and GST returns to avoid discrepancies flagged by authorities.
-Errors While Uploading GSTR-1 Data
Uploading incorrect invoice details in GSTR-1 affects the recipient’s ability to claim ITC. Enter invoice details weekly to minimize errors.
-Confusion Between Zero-Rated and Nil-Rated Supplies
Zero-rated supplies (e.g., exports) and nil-rated supplies (e.g., goods with a 0% tax rate) are distinct categories. Ensure proper reporting in returns.
-Receiving ITC Without Proper Invoice
ITC can only be claimed against valid GST invoices. Retain valid documentation to avoid issues during audits.
-Using Incorrect Invoice Format
Invoices must include mandatory details such as the place of supply and GSTIN. Non-compliance may lead to penalties and denial of ITC to recipients.
-Availing ITC Against Fake Bills
Claiming ITC based on bogus invoices is illegal and attracts severe penalties, including reversal of credit, interest, and legal action.
-Common Oversights
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Missing HSN codes in invoices.
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Selling under incorrect tax rates.
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Incorrect GST head for tax payment.
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Not generating e-way bills for returns.
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Non-reversal of ITC for free samples or personal consumption.
Conclusion
Timely and accurate filing of GST returns is crucial for businesses to maintain compliance and avoid penalties. By understanding and addressing these common errors, businesses can optimize their GST filing process and significantly reduce the likelihood of mistakes.
FAQs
1. What are the common errors in filing GST returns?
Ans. Taxpayers often encounter issues such as uploading incorrect invoice data, claiming ineligible Input Tax Credit (ITC), failure to file NIL returns on time, incorrect tax categorization, and overlooking the reversal of input credits. Additionally, GST returns cannot be amended once filed, requiring utmost accuracy during the initial submission.
2. How can GST return errors be rectified?
Ans. The GST portal allows taxpayers to correct mistakes using the 'Amendment' feature. To do this, log in to the GST portal, navigate to the 'Services' tab, select 'Returns', and click on 'Amendment of Returns.' Choose the return that needs modification, update the necessary details, and submit the revised return.
3. Why is proper documentation crucial in GST filing?
Ans. Maintaining accurate records of invoices, receipts, and other transaction-related documents is vital. These records are essential for preparing GST returns and resolving discrepancies during audits or inspections by tax authorities.
4. Is it mandatory to claim ITC as per GSTR 2B?
Ans. Yes, under Rule 36(4), taxpayers can only claim ITC for invoices uploaded by suppliers in their GSTR-1. The ITC for invoices not uploaded by vendors cannot exceed 10% of the eligible credit as per GSTR 2B, ensuring compliance and reducing mismatches.
5. What distinguishes GSTR-1 from GSTR-3B?
Ans. GSTR-1 is a detailed return that records outward supplies, filed monthly or quarterly based on turnover. GSTR-3B, however, is a summary return filed monthly, providing an overview of sales, purchases, and ITC claimed.
6. Why is GST filing considered challenging?
Ans. The GST regime has multiple tax slabs, ranging from exemptions to 28% for luxury goods, requiring businesses to classify goods and services correctly. Frequent updates and procedural changes add to the complexity, making it challenging for businesses to ensure compliance.
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