GST (Goods and Services Tax) compliance can be tricky for businesses of all sizes, especially for those who are new to the system. Mistakes during GST filing can lead to penalties, interest charges, or disallowed Input Tax Credit (ITC). In this blog, we’ll walk you through the most common errors in GST filing and how to avoid them.
✅ 1. Mismatch of GSTIN Numbers
Problem:
One of the most common mistakes is a mismatch between the buyer’s GSTIN on the invoice and the one entered during the filing. This error can prevent businesses from claiming Input Tax Credit (ITC) on their purchases.
Solution:
- Always double-check the GSTIN of the buyer and seller on invoices.
- Ensure the GSTIN entered during filing matches the one mentioned on the invoice.
- Verify that your GSTIN is updated in the records and correctly listed in the GST portal.
✅ 2. Incorrect HSN/SAC Codes
Problem:
The HSN (Harmonized System of Nomenclature) for goods or SAC (Service Accounting Code) for services needs to be entered correctly for accurate tax calculations. Incorrect or missing codes can lead to incorrect tax rates being applied.
Solution:
- Always use the correct HSN/SAC codes. You can find the complete list of codes on the GST portal or in your accounting software.
- For businesses with a turnover of over ₹5 crore, entering the correct HSN code is mandatory.
- Ensure that your accounting software is updated to include the correct HSN/SAC codes for each product or service.
✅ 3. Failure to Reconcile Purchases with GSTR-2A and GSTR-2B
Problem:
If the ITC claimed on purchases does not match the details in GSTR-2A or GSTR-2B, it could result in the disallowance of the credit or an audit notice.
Solution:
- Regularly reconcile your purchases with the auto-populated data in GSTR-2A (for B2B transactions) and GSTR-2B (for ITC eligibility).
- If there is any discrepancy between your invoices and GSTR-2A, you should follow up with your suppliers to ensure they file their returns correctly.
- Only claim ITC on the amount reflected in GSTR-2A and GSTR-2B to avoid future issues.
✅ 4. Late Filing of GST Returns
Problem:
Failure to file GST returns on time can lead to penalties and interest charges. Businesses often miss the deadlines for GSTR-3B or GSTR-1.
Solution:
- Set reminders for filing your GST returns before the due date.
- Use automated software that alerts you about upcoming due dates.
- File monthly returns (GSTR-1) and summary returns (GSTR-3B) on time to avoid penalties. Businesses should also file their annual return (GSTR-9) within the prescribed time.
✅ 5. Incorrect Tax Amounts Entered in GSTR-3B
Problem:
Entering incorrect tax amounts or failing to account for certain taxes can lead to discrepancies in the final filing, which can result in tax liability penalties.
Solution:
- Ensure that the tax amounts in your GSTR-3B match your sales and purchase invoices.
- Regularly check your books of accounts to confirm the accuracy of GST amounts before filing.
- If unsure, consult your GST consultant or accountant before submitting the return.
✅ 6. Non-Reversal of ITC on Rejected Goods/Services
Problem:
If goods or services are returned, businesses often forget to reverse the Input Tax Credit (ITC) claimed on those items, resulting in non-compliance.
Solution:
- Reversal of ITC is mandatory for returned or damaged goods.
- Make sure you reverse the ITC for such goods in the next filing period.
- For goods returned, Issue a debit note and adjust your ITC accordingly.
✅ 7. Claiming ITC on Ineligible Purchases
Problem:
Businesses sometimes incorrectly claim ITC on ineligible purchases, such as personal goods, exempted items, or goods not used for business purposes.
Solution:
- Ensure ITC is only claimed on eligible goods and services used for business purposes.
- Goods like motor vehicles, food and beverages, or personal consumption items are not eligible for ITC, unless used in specific circumstances (e.g., for business purposes like travel).
- Regularly check the list of ineligible goods and services for ITC claims under GST.
✅ 8. Mistakes in Reconciliation of GSTR-1 with Sales Data
Problem:
Many businesses make the mistake of not reconciling sales data with GSTR-1, which can cause mismatches between the sales declared in the return and the actual sales made.
Solution:
- Reconcile your sales data with GSTR-1, ensuring that the figures match.
- If there’s any mismatch, file an amended return to correct the data.
- Regularly verify that all B2B and export sales are accurately declared.
✅ 9. Not Filing GSTR-9 (Annual Return)
Problem:
Many businesses forget to file their annual GST return (GSTR-9), or they delay filing it. This can lead to additional penalties or notices from the tax department.
Solution:
- File GSTR-9 every year. This return must be filed annually, and it summarizes all the monthly returns filed during the year.
- Ensure that all monthly returns (GSTR-1 and GSTR-3B) are filed accurately before submitting the annual return.
- If there are discrepancies in the annual return, be prepared for GST audits or scrutiny by the tax authorities.
🔑 Key Takeaways
- Timely Filing: File your GST returns on time to avoid penalties.
- Accurate Invoices: Ensure correct GSTIN, HSN/SAC codes, and tax amounts.
- Reconciliation: Always reconcile your purchases with GSTR-2A and GSTR-2B.
- ITC Reversal: Reversal of ITC must be done when goods or services are returned.
- Consult a GST Expert: If you’re unsure about any aspect of GST filing, consider consulting a GST expert or tax professional.
🧾 Final Words
GST filing is a vital process, and avoiding common mistakes can help businesses maintain smooth operations and stay compliant with the law. Regular reconciliation, accurate invoicing, and timely filing are crucial to preventing issues down the road.
📞 Need Help with GST Filing?
If you’re facing challenges with GST filing, reconciliation, ITC claims, or audits, feel free to contact us at:
🧾 Taxeasy Solution
📍 Supaul Bazar, Biraul,
Darbhanga, Bihar – 847203
📞 Mob: 6289187606
📧 Email: jhajp96@gmail.com
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