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10 Things to Take Care of While Filing a GST Return

10 Things to Take Care of While Filing a GST Return

1. Filing the return by Due dates

There are multiple consequences of late filing of GST returns. Levy of late fees is one of them. Other than that you may also lose clients due to late filing.

a) Late Fees: Filing GST returns on or before dates to avoid late fees. First thing, file your return before the due date. There are many consequences for delays in return filing beyond due dates. There is a late fee calculated for the delay on an everyday basis. But it is restricted to Rs.10,000 as per law. Many taxpayers lost the due date of filing late fees. A huge amount of late fees was accumulated. Then a relief was provided via an amnesty scheme. CBIC reduced the late fees from June 2021 onwards. Now the maximum amount of late fees on GSTR 3b is tabulated below.

1.

When tax payable is Nil

Rs. 250

2.

When turnover is up to 1.5 Cr

Rs. 1000

3. 

If Turnover is from 1.5 Cr to 5 Cr

Rs. 2500

4. 

Turnover is above Rs. 5 Cr

Rs. 10,000

Late fees for GSTR 1 are Rs. 20  per day for Nil return and Rs 50 for others up to a maximum amount of Rs. 10,000. This maximum amount is per return. If the returns of say 10 months are pending the maximum late fees can not be more than Rs. 1,00,000.

b). Loss of business: As per rule 36(4), you can pass on ITC only by filing a return. Loss of ITC may result in loss of business. In case of a long delay, the ITC may lose forever. No one will like to work with a non-compliant business. Now you can check the return filing status on the GSTN portal itself. You can see the basic details even without a login. The details related to turnover or income can also be checked on the login. You just need to enter the GSTIN number of the supplier. All details will be auto-populated by the GSTN portal. This can be quite useful for the taxpayers. Before you enter into a transaction with a new supplier. Check their compliance history. If they are not compliant then you can avoid doing business with them.

2. Reconciling Input of GSTR-2A, GSTR-2B with Books

As a buyer, it is important to reconcile the books with GSTR 2A and 2B. The auto-population in GSTR 2b or 2a is one of the mandatory requirements. You are eligible to claim the ITC fulfilling the following conditions only.

  • The ITC should be appearing in GSTR 2A and 2B.
  • The invoice for that supply is received by the recipient. Taking ITC of a supply without invoices is not valid.
  • The supply is received by the ITC seeker.

3. Amount of Exports to be Filled in Zero-rated supplies. Not in Nil rated or exempt supplies

Many taxpayers make this common mistake. They enter exports in exempt supply. Mind it, Exports are not exempt. They should be entered in Zero rated supply. In GSTR 1 also they should be entered in a separate table. The data of export invoices are entered in GSTR 1. Every figure should match. Otherwise, the taxpayer may lose the refund of IGST paid on export. Also for a refund of ITC, correct data in GSTR 3b and 1 is mandatory.

4. Choosing the correct tax rate while Entering details of an invoice

The rate of tax while entering the data is important. There can be multiple rates. The correct one should be selected.

5. Claiming only Eligible ITC

Section 17 of the CGST act provides for the blocked input tax credit. The items covered by section 17(5) are not eligible for the input tax credit. There are conditions to fulfill to take those ITC. Even if the ITC is appearing in GSTR 2A or 2B. These ITC should not be taken by the taxpayer. Some common items covered by that section are-

  • ITC on purchase of motor vehicles.
  • ITC on insurance, repair, or maintenance of motor vehicles.
  • Food items
  • Life insurance
  • Items used for personal purposes
  • Tax paid by the composition dealer
  • Tax paid on domestic purchase by an NRTP

There are some other items also. Here we have covered some of them. This section should be referred to before making the final claim of an input tax credit.

6. Entering RCM invoice

Reverse charge invoices should be entered in return. In this case, we can click on a reverse charge while entering the invoice. The tax liability, in this case, will automatically shift to the buyer. In case of reverse charge where the supplier is registered. He will raise the invoice. Although the tax will be paid by the recipient of the supply. On the other hand when the invoice is raised by the buyer in case of RCM purchase from an unregistered dealer. This should be entered in the document's details.

7. Preparing HSN-wise summary

HSN wise summary is mandatory now. Fill it carefully. The mistake in this data may result in a levy of penalties. It may also become a reason for recovery. As in the case of the wrong HSN, the tax rate of the item may change. If you paid the tax at a lower rate it may attract recovery of balance tax. The HSN codes can be traced using the Tariff under the customs Act. Then there are principles to find out the correct classification. They are called principles of classification. The HSN should be determined using those principles.

8. Computing interest liability in the case where Invoices were not entered in GSTR-1 & Tax for the same was not paid in GSTR-3B & such omitted invoice was included in the return of next month

In case of late filing of the return, and interest levy is attracted. When we enter an invoice in return for a later month we are liable to pay interest. Section 50 of the CGST Act covers the provisions related to the interest. The earlier provision was provided for the interest on the gross amount. But then the section is amended retrospectively. It is amended from 1st July 2017 itself.

9. The input of tax paid in Reverse charge can only be claimed if it was or it is being paid in the monthly return

The ITC of tax paid in reverse charge can be taken only if it is paid in cash. The tax under reverse charge can be paid via cash ledger only. Then we can claim its credit only if we have claimed it in our monthly returns.

10. Filling all the required tables in return

Many times we fill in the bare minimum data to file a return. Although the return is filed in that case, it is not complete. The GSTN portal can't even raise a red flag in that case. The return is technically filed but it can attract a penalty. A return is complete only when all required data is filled into it. In the case of GSTR 3b, a window appears before we go into the return. The taxpayer is required to choose the required fields. Many times taxpayers leave some tables considering them less relevant. But all tables are required to be filed depending on transactions.

These were some common mistakes while filing GST returns. Sometimes we fill in incomplete returns. Return is a mechanism of self-assessment in GST. Any misinformation may lead to notices. The penalty can also be levied if it comes to an error by intention. It may be seen as a fraud. Thus a careful filing of return is required.

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