Common Mistakes in Filing GST Returns: How to Avoid Them
To ensure smooth compliance, it is compulsory to file regular GST returns as per the case. Some returns are required to be filed monthly while others are required annually or quarterly. Statements are to be reconciled as certain GSTRs are auto-drafted and do not permit manual edits. The taxpayers have to be alert while filing their respective returns. This article provides a detailed guide on the Common Mistakes in Filing GST Returns and How to Avoid Them.
Not filing your nil returns, mismatch in invoice data, disclosure and payment of the tax under the wrong GST slab, categorizing the supplies under the erroneous section, wrong ITC claims, and incorrect record of documentation are some of the mistakes that taxpayers can avoid while filing their respective returns.
Not Filing Nil Returns
Registered persons have to file the GST returns even in case of nil payment. It is a misconception that taxpayers carry that when there is no transaction between two businesses, they do not have to file the returns. However, it is a mistaken notion as the GST returns are to be filed even in case of nil returns or no transactions between two parties or businesses. To avoid this mistake, ensure that the return is filed even in case of no transaction.
Mismatch in Invoice Data
When the invoice details provided by the supplier in the respective GST returns do not match the details reported by the recipient, it is a case of a mismatched invoice. The mismatch can result in the cancellation of the ITC for the supplier if the details are not reconciled in GSTR 2B. To claim smooth ITC, ensure that the invoices are verified.
Disclosure of Tax Under Wrong GST Slab
Determining the relevant tax slab under GST and clearing the liabilities accordingly is quite complex as GST is comparatively a new tax regime. New concepts such as place of supply and multiple tax slabs applicable to differentiated goods and services can make it difficult to comply. However, in the case of taxes charged under the wrong slab, if the amount is higher than the actual liability and it is not submitted to the government, a penalty of 100% of the tax due or Rs 10,000 whichever is higher will be charged from such taxpayer. Therefore, to avoid being penalized, ensure that the taxes are calculated based on the appropriate slabs under GST.
Documentation and Records
- Reporting outward supply liability under RCM or vice versa
- No reconciliation of GSTR 1 and GSTR 3B for the same month
- Suppliers filing GSTR either GSTR 3B or GSTR 1, not both
- Avoiding issuance of tax invoices (self-invoice) in case of RCM
- Not filing of ITC-04 (records details of inputs or capital goods dispatched to or received from a job worker)
- Non-issuance of receipt voucher, payment voucher, or refund voucher
- Non-maintenance of the ITC register such as avoiding updating the GSTIN of all the suppliers
- Raising debit notes in case of purchase return before the supplier raises credit note
- No display of GSTIN or GST Registration Certificate at the entrance of the office or premises
Common Mistakes in the Case of Outward Supplies
- Avoid making payments even after the recovery from employees
- No GST payment on commission received in foreign currency under intermediary service
- No knockoff entries of advance received
- No GST payment on advance received from the supply of service
- Non-reporting of interest income under non-GST supply
The above-mentioned mistakes are common that taxpayers can make in case of outward supplies. Some other common errors made in the case of exporting goods and services are such as
- Incorrect shipping bill mentioned in GSTR 1
- Incorrect port code
- IGST paid in GSTR 1 should match the IGST amount indicated on the shipping bill
- Bank account details submitted to the customs should be correct
Get Started with TaxDunia
Taxpayers can avoid these mistakes to ensure smooth compliance and avoid getting notices from the tax authorities. Proper maintenance of records and regular return filing results in establishing credibility for the business. Reach out to TaxDunia to avoid making such common mistakes. We offer personalized services to cater unique needs of our clients. Let us start working together.
