An indirect duty imposed on the supply of goods and services in India, GST has replaced a number of levies like VAT, excise duty, service tax, and so on. The implementation of GST has brought a lot of changes in the taxation system of India. It has become mandatory for businesses to register for GST in order to comply with tax laws. However, businesses and individual taxpayers often end up making certain common mistakes while filing GST, which can lead to heavy penalties, late fees, and even legal issues.
Filing accurate GST returns is important to maintain compliance with tax regulations, avoid penalties, and establish credibility with tax authorities. Let’s discuss some common errors that are made by taxpayers while filing GST returns.
Common mistakes made during GST filing:
- Incorrect ITC claim and reversal: The tax liability of a business can be reduced with the help of the Input Tax Credit (ITC). As per the GST rules, availing ITC is subject to certain rules and conditions. A taxpayer needs to report the correct value of input tax credit while filing GST returns.
- Non-payment of GST in RCM: Under the Reverse Charge Mechanism (RCM), the tax charges get reversed from the seller to the buyer, which makes the buyer of goods and services liable for tax payments. If one does not fulfil the reverse-charge tax obligation, it can lead to interest payments and loss of input tax credit.
- Forgetting to mention exempted turnover in GST returns: Nil-rate supplies don’t have any effect on the GST liability of the taxpayer, but it is to be reported while filing a return. Every business registered under GST must report the exempted or Nil-rated sales in GSTR 3B and GSTR 1.
- Filing under the wrong GST category: Taxpayers need to ensure that they furnish their GST liabilities or ITC under the correct category. Failure to do so can lead to unfavourable cash flow and other calculation errors.
- Mismatch of data while filing GSTR-3B and GSTR-1: Taxpayers need to ensure that they accurately reconcile GSTR-3B (summary return) with GSTR-1 (sales return) on a monthly basis to ensure accuracy and consistency. Neglecting the same can often lead to revenue loss.
- Incorrect entry of invoice data in GSTR-1: Businesses often make mistakes while reporting invoice-wise data of the outward supplies including place of supply and rate of tax. It is important to diligently enter recipient invoice details as such mistakes can lead to reconciliation errors between GSTR-1 and GSTR-3B.
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