Its been nearly three years since the GST law was introduced in India. While many have managed to fall in line with this new regime of taxation, many are still struggling to do so. In addition, the government has been diligently updating the system, keeping the GST taxpayers on their toes to meet with the compliance requirements.
- File Your Returns On Time: The GST law involves submission of lots of forms. Therefore, be sure to keep a track of all the forms and their due dates to avoid interest, late fees.
- Preserve The Right Documentation: An important requirement for auditing, however even businesses not eligible for auditing under the GST law should ensure maintenance of the right paperwork in the form of purchase and sales records, fixed asset records, payment challans, e-way bills, etc. This would also help businesses reconcile their returns with their account books.
- Rectify Your Returns Prior to Filing of The Annual GST Return: The GST taxpayers must ensure that they have made the requisite amendments/changes to their monthly returns in a timely manner. If the same is not done, it could generate difference between returns filed during the year and the annual return. Thus, reconciliation must be done and discrepancy, if any, must be corrected before filing of the annual GST return. While on the subject of reconciliation, the taxpayer must ensure that their e-way bills match the data mentioned in GSTR-1 form; a mismatch between the two can result in issuance of notice against the taxpayer.Another beneficial practice that the GST taxpayers can adopt is to compare and analyze their GSTR-3B returns that have been filed, with GSTR-2A and GSTR-1, to ensure uniformity of data throughout.
- Inform GST Authorities of Changes: The GST taxpayers must inform the concerned authorities in the event of any amendments in the particulars furnished at the time of initial registration of their business. This would require submission of an application with supporting documents verifying your claims of change.
- For Turnover of 2 Crores, Audit Is A Must! Every GST taxpayer whose turnover exceeds ₹ 2 Cr. during a financial year must compulsorily get their accounts audited by a qualified CA/CMA and submit the same.
- Choose The Wrong GST Head/Category: Be extra careful when choosing the GST head since GSTN does not permit the inter-use of taxes. Payment under the wrong head can result in unfavorable working capital. Another common error by a GST taxpayers is they believe that zero-rated supplies and nil-rated are synonymous with each other, which is a wrong notion.Zero-rated supplies refer to export supplies and supplies to the Sez, whereas nil-rated supplies refer to supplies on which the tax rate is equivalent to zero. Thus users must not end up trying to claim input tax credits on nil-rated supplies.
- Forget Filing Your Nil Return: GST taxpayers tend to forget the filing of nil return for a particular period when their business does not undertake any transactions. However, this oversight must be avoided to ensure smooth filing in the future since GSTN does not permit the filing of returns in certain situations where prior period returns have not been filed.
- Choose Wrong Tax Rates: GST taxpayers must keep themselves updated with government notifications, to avoid the application of wrong tax rates. All businesses must keep pace with the updated tax rates.
- Claim unqualified Input Tax Credit: The GST taxpayers are not entitled to avail input tax credit in certain situations such as if the payment is not made to suppliers within 180 days, capital goods have been sold, free samples have been distributed to customers and business partners, goods have been destroyed, etc. Thus, it is imperative for taxpayers to keep pace with provisions concerning input tax credit. Any wrong attempt to avail input tax credit, despite not meeting the eligibility criteria, can result in the issuance of notices by the GST department.
- Forget to Apply For Transitional Credit: For those who are still transitioning from the old regime to the GST regime, it is imperative to file forms TRAN-1 and TRAN-2, respectively. This enables the taxpayers to claim credit starting from the pre-GST period right up till the extended due dates.
To sum up, these are some of the basic measures that a GST taxpayer can adopt in order to stay complaint with the GST regime and avoid issuance of notice or any form of adverse actions from the authorities. More importantly, it unclogs the statutory systems of the business and improves the functioning and well-being of the business.