The Ultimate GST Filing Checklist for Indian Businesses- How to Stay Compliant and Avoid Penalties!

Introduction

Goods and Services Tax (GST) is a tax reform implemented in India to ensure a transparent and simplified tax structure. All businesses registered under the GST must file returns, failing which they may face hefty penalties. This article provides a comprehensive checklist for businesses to stay compliant with the GST regulations and avoid penalties.

Significance of GST filing

GST filing is essential for businesses to maintain their compliance and avoid penalties. Filing GST returns on time is critical to ensuring the smooth functioning of businesses and preventing legal consequences. Non-compliance can lead to penalties, interest on late payments, and the cancellation of GST registration.

Brief overview of the article

This article provides an in-depth understanding of GST filing and offers a comprehensive checklist to ensure compliance. We will discuss various aspects related to GST filing, including eligibility criteria, types of GST returns, common errors in filing, penalties for non-compliance, and tips for successful GST filing.

Understanding GST filing

What is GST?

GST is a consumption-based tax system where the tax is collected at the point of consumption. It is levied on the supply of goods and services and replaces all indirect taxes previously levied by the central and state governments.

How does GST filing work?

GST filing is the process of submitting GST returns on a periodic basis. The GST system requires businesses to file returns monthly, quarterly, or annually, depending on their turnover and nature of business.

What are the GST return forms?

GST returns are filed through different forms depending on the nature of the business and its turnover. The most common forms include GSTR-1, GSTR-2, GSTR-3B, GSTR-4, GSTR-9, and GSTR-10.

Eligibility criteria for GST filing

Businesses with a turnover of more than Rs. 40 lakhs are required to register for GST. However, businesses with a turnover of up to Rs. 1.5 crores can opt for the composition scheme and file GST returns quarterly.

Businesses required to file GST returns

All businesses registered under the GST must file their returns. This includes regular taxpayers, composition scheme taxpayers, and e-commerce operators.

Businesses exempted from filing GST returns

Certain businesses are exempted from GST filing, such as agriculturalists, state government departments, public sector undertakings (PSUs), and charitable trusts.

Threshold limits for GST registration

Types of GST returns to be filed

There are multiple types of GST returns required to be filed by businesses, including:

GSTR-1: Details of outward supplies

Businesses must provide details of their outward supplies in this return.

GSTR-2: Details of inward supplies

Businesses must provide details of their inward supplies in this return to claim Input Tax Credit (ITC).

GSTR-3B: Monthly summary return

This return provides a monthly summary of all the transactions undertaken by taxpayers.

GSTR-4: Quarterly return for composition scheme

This return is applicable for businesses registered under the composition scheme.

GSTR-9: Annual return

This return provides an annual summary of all the transactions undertaken in the financial year.

GSTR-10: Final return

This return is applicable for businesses surrendering their GST registration or whose registration has been canceled.

Preparing for GST filing

Organizing and maintaining records

Maintaining accurate records is essential for timely GST filing. Businesses must preserve their tax invoices, bills of supply, and credit and debit notes for at least six years from when they were last filed.

Verifying supplier details

Verifying supplier details is crucial, as any discrepancies can lead to penalties. Businesses must ensure that the GSTIN provided by the supplier is valid, and the invoice bears all the necessary details such as the name, address, and GSTIN of the supplier and the recipient.

Reconciling GSTR-2A with GSTR-3B

Reconciling GSTR-2A with GSTR-3B is essential to ensure that ITC is accurately claimed. The details of inward supplies auto-populate in GSTR-2A, and businesses need to reconcile it with their GSTR-3B before submitting the return.

Common errors in GST filing

Businesses must avoid errors while filing their GST returns, as it may lead to penalties. Some common errors to avoid include:

Incorrect GSTIN

The GSTIN must be accurate and validated at the time of filing.

Wrong HSN/SAC code

HSN/SAC codes denote the nature of the goods and services. Using the wrong code may lead to incorrect tax calculation.

Mismatch in invoice details

Any discrepancies in the invoice details may lead to penalties. The name, address, and GSTIN of the recipient and supplier must be accurate.

Incorrect tax calculation

Tax must be calculated based on the correct HSN/SAC codes. Businesses must ensure that they are applying the correct tax rate.

Penalties for non-compliance

Businesses failing to comply with the GST regulations may face penalties, such as:

Late filing fees

Businesses filing their returns after the due date must pay a late filing fee of Rs. 50 per day.

Interest on late payment

Businesses failing to pay the GST amount on time are liable to pay interest at a rate of 18% per annum.

Penalty for incorrect filing

A penalty of Rs. 10,000 or 10% of the tax amount due, whichever is higher, may be imposed on businesses filing incorrect returns.

Cancellation of GST registration

The GST registration may be canceled for businesses failing to comply with the regulations.

GST compliance checklist

Timelines for GST filing

Businesses must ensure that they file their returns within the due dates. The due date for GSTR-1 is the 11th of the following month, while GSTR-3B is the 20th of the following month.

Mandatory documents for GST filing

The necessary documents for GST filing include tax invoices, bills of supply, credit and debit notes, and e-way bills.

GSTIN verification

Businesses must ensure that the GSTIN entered is valid and accurate.

Details to be included in the GST returns

The GST returns must include details of inward and outward supplies, tax payment, and the ITC.

Important GST updates and changes

Businesses must stay updated with the latest GST updates and changes to stay compliant.

Changes in GST rates

The GST council regularly revises the GST rates, and businesses must ensure they are applying the correct tax rate.

Updates in GST return forms

Businesses must stay updated with any changes made to the GST return forms to avoid errors while filing returns.

GST Council decisions

The GST council takes crucial decisions that impact businesses. Staying updated with these decisions will help businesses stay compliant.

GST return filing process

Online vs. offline filing

GST returns can be filed both online and offline. However, online filing is relatively easier, quicker, and more convenient.

Step by step guide to GST filing

The GST filing process involves several steps, and businesses must follow the correct procedure.

Common errors to avoid while filing

Businesses must avoid errors while filing their GST returns to stay compliant and avoid penalties.

GST audit and assessment

Types of GST audits

There are three types of GST audits: regular audits, special audits, and summary audits.

GST audit procedure

The GST audit procedure involves an audit of the taxpayer’s records and verifies the compliance with the GST regulations.

GST assessment process

The GST assessment process enables the tax authorities to scrutinize the GST returns filed by taxpayers.

GST filing for specific businesses

GST filing for small businesses

Small businesses can opt for the composition scheme and file GST returns quarterly.

GST filing for e-commerce businesses

E-commerce businesses must register under the GST and file their returns as regular taxpayers.

GST filing for export businesses

Export businesses can claim refunds on the GST paid on inputs used in the export of goods.

GST filing for service providers

Service providers must register under the GST and file their returns as regular taxpayers.

GST filing software and tools

Features of GST filing software

GST filing software offers several features that simplify the GST filing process, such as automated data entry and report generation.

Top GST filing software in India

Some popular GST filing software in India include Tally, ClearTax, and QuickBooks.

Tips for successful GST filing

Maintain accurate records

Maintaining accurate records is essential for timely GST filing and avoiding penalties.

Avoid delays

Businesses must file their returns within the due dates to avoid penalties.

Seek professional help when needed

Seeking professional help will enable businesses to stay compliant and avoid errors while filing GST returns.

FAQ

Do I need to file GST return even if my turnover is below the threshold limit?

No, businesses with a turnover of less than Rs. 40 lakhs are not mandatorily required to register for GST or file GST returns.