Common GST Mistakes and How to Avoid Them

 

Goods and Services Tax (GST) has been in effect in India since 2017, but businesses still struggle with avoiding common mistakes while filing their GST returns. Here are 12 common GST mistakes and how to avoid them:

1.       Incorrect GSTIN: Ensure that the GSTIN of your supplier is mentioned correctly in the invoice or debit note. If the GSTIN is incorrect, you cannot claim input tax credit (ITC) and the supplier may face penalties.

2.       Not filing GST returns on time: GST returns must be filed on time to avoid penalties and interest charges. Keep track of due dates and set reminders to avoid missing the deadlines.

3.       Incomplete or incorrect invoice details: Ensure that all mandatory details such as invoice number, date, value of goods or services, and GST charged are mentioned correctly in the invoice.

4.       Not reconciling books of accounts with GST returns: Reconciling books of accounts with GST returns is essential to avoid discrepancies and ensure accuracy in returns.

5.       Incorrect HSN code: Incorrect classification of goods and services under Harmonized System of Nomenclature (HSN) codes can lead to incorrect GST payments and penalties.

6.       Not updating GST registration details: Keep your GST registration details updated with the latest information to avoid any issues while filing GST returns.

7.       Ignoring reverse charge mechanism (RCM): Under RCM, the recipient of goods or services is liable to pay GST instead of the supplier. Ignoring RCM can lead to incorrect GST payments and penalties.

8.       Not claiming eligible ITC: Keep track of eligible ITC and claim it on time to reduce your GST liability.

9.       Not maintaining proper records: Proper record keeping is essential for GST compliance and to support your claims for ITC.

10.   Filing incorrect returns: Filing incorrect returns can lead to penalties and interest charges, hence double check the returns before filing them.

11.   Not accounting for GST on advances: GST must be paid on advances received for supplies of goods or services, ignoring which can lead to incorrect GST payments and penalties.

12.   Not updating GST software: Keep your GST software updated with the latest changes and updates to ensure compliance with GST regulations.

Avoiding these common GST mistakes can help businesses in India to comply with GST regulations and avoid penalties and interest charges. It is advisable to consult a GST professional or a chartered accountant for any queries or assistance related to GST compliance.