5 Common Mistakes in GST Filing and How to Avoid Them
Filing GST returns can be a complex process, especially for businesses new to the tax system. Even minor errors in GST filings can lead to penalties, notices, or delays in Input Tax Credit (ITC) claims. By understanding common mistakes and learning how to avoid them, businesses can ensure compliance and avoid unnecessary complications. This blog highlights five common GST filing mistakes and provides practical tips to address them, illustrated with Indian examples.
1. Incorrect or Mismatched Data in Returns
One of the most common mistakes in GST filing is providing incorrect or mismatched data between different GST returns, such as GSTR-1 and GSTR-3B. Mismatches can arise from:
Discrepancies in invoice details.
Errors in reporting ITC claims.
Example:
A retailer in Pune reported sales of ?50 lakhs in GSTR-1 but declared ?48 lakhs in GSTR-3B. This discrepancy triggered a notice from the GST department.
How to Avoid:
Regularly reconcile sales and purchase data with GSTR-2A/2B.
Use GST-compliant software to auto-populate data across returns.
Double-check data before submission.
2. Missing the GST Filing Deadline
Late filing of GST returns attracts penalties and interest on outstanding tax liabilities. Repeated delays may also result in suspension of GSTIN.
Example:
A construction firm in Chennai missed the GSTR-3B filing deadline for July, incurring a penalty of ?50 per day and 18% interest on unpaid tax.
How to Avoid:
Set calendar reminders for GST filing deadlines.
Opt for automated reminders through GST software.
File returns early to account for technical glitches on the GST portal.
3. Improper ITC Claims
Claiming Input Tax Credit incorrectly can lead to penalties and denial of credits. Common errors include:
Claiming ITC on ineligible goods or services.
Claiming ITC without matching it with GSTR-2B.
Example:
A manufacturer in Gujarat claimed ITC on office furniture purchases, which is not allowed under GST rules. This resulted in a tax demand during an audit.
How to Avoid:
Verify ITC eligibility under GST laws.
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Match ITC claims with GSTR-2B before filing returns.
Maintain accurate records of all purchase invoices.
4. Not Generating E-Way Bills for Applicable Transactions
Failure to generate e-way bills for goods transported worth over ?50,000 can result in penalties and seizure of goods.
Example:
A logistics company in Delhi transported electronics worth ?2 lakhs without an e-way bill. The goods were seized, and the company faced a fine.
How to Avoid:
Familiarize yourself with e-way bill rules.
Train staff on when and how to generate e-way bills.
Use integrated software to generate e-way bills automatically for eligible transactions.
5. Errors in Tax Calculation
Miscalculating tax liability due to incorrect GST rates or classification of goods/services can lead to underpayment or overpayment of taxes.
Example:
A service provider in Mumbai charged 12% GST on professional consulting services instead of the correct rate of 18%, resulting in an additional liability during an audit.
How to Avoid:
Verify GST rates and HSN/SAC codes for your products or services.
Use automated tools to calculate tax accurately.
Stay updated on changes in GST rates and rules.
Best Practices for Error-Free GST Filing
Maintain Accurate Records: Keep all invoices, receipts, and financial records well-organized.
Use Technology: Leverage GST-compliant software for error-free filing.
Regular Reconciliation: Reconcile data periodically to identify and correct errors early.
Stay Informed: Keep track of GST updates, notifications, and compliance requirements.
Seek Professional Help: Consult a tax expert or CA for complex GST matters.
Conclusion
Avoiding common mistakes in GST filing requires attention to detail, regular reconciliation, and staying informed about GST rules. By implementing the preventive measures discussed in this blog, businesses can streamline their GST compliance, minimize errors, and avoid penalties. Taking a proactive approach not only ensures hassle-free tax filing but also fosters trust with tax authorities, contributing to your business’s financial health and reputation.