GST compliances

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GST Registration
 
definition of

Goods and Service Tax

Goods and Services Tax (GST) is an indirect tax regime introduced in India in 2017 to replace multiple overlapping taxes levied by the central and state governments. It is based on the concept of ‘one nation, one tax’ for simplifying taxation on goods and services.

Goods and Services tax- GST

Why are GST Compliances Important?

Some key reasons why business entities must focus on timely GST compliances are:

  1. Avoid heavy interest and penalties: Any delays or inaccuracies in GST filing and payments attract huge fines plus applicable interest which greatly increase costs.
  2. Prevent legal action: Willful evasion of GST can lead to legal proceedings, even arrest in certain cases based on the scale of defaults.
  3. Access taxpayer benefits: Correct GST compliance helps companies claim relevant input tax credits, tax refunds, permissions, and sanction lower GST rates which increase working capital and margins.
  4. Maintain business credibility: Observance of GST laws builds trust and credibility with customers, vendors, tax authorities and lending institutions which enables smoother business operations and growth.

Key GST Compliance Requirements

Some important areas where businesses need to focus on GST compliance are:

  • Registration & Reporting- Businesses with annual turnover over Rs. 40 lakhs (Rs. 20 lakhs for North Eastern states) have to register for GST to receive a GSTIN number. Applicable GST has to be appropriately charged on taxable goods and services while reporting turnover in regular GST returns.
  • Invoicing- Businesses have to raise proper GST compliant invoices clearly reporting the GSTIN, place of supply, categories, and tax rates which help document transactions and claim tax credits. E-invoicing and EWB generation also help authorities analyze GST applicability better.
  • Filing Accurate Returns-  Various GST returns like GSTR-1, GSTR-3B have to be filed periodically reporting outward and inward supplies, taxes collected, input tax credits claimed and taxes owed. Nil filing also mandatory in no-transaction months. Annual filing and GST audits needed for bigger entities.
  • Paying GST Liabilities – The tax liability arising in a tax period has to be paid on time based on GST return filing. GST payments have prescribed due dates and channels through approved banks. Delayed payments incur heavy interest plus penalties.
  • Input Tax Credits (ITC)- Businesses can claim ITC only if taxes are already paid by their vendors and the transactions qualify based on documents uploaded by suppliers. Time limits and reconciliations required to claim ITC else it lapses.
  • Record Keeping- Proper accounts and records including invoices have to be maintained for easy reconciliation and GST audits. Records can be summoned anytime so must archive safely per guidelines for up to 5 years usually.

Areas to Avoid GST Non-Compliance Penalties

Registration Lapses:
  • Delay in mandatory registration
  • Not intimating registration amendments or surrenders
Reporting & Filing Lapses
  • Errors, gaps or delays in reporting outward/inward supplies
  • Failure to undertake Nil-filing during no-supply months
  • Non-filing or errors in annual returns and final GST reports
Tax Payment & ITC Lapses
  • Delayed payment, incorrect bifurcation between SGST & CGST portions
  • Ineligible or fraudulent ITC claims, Missing ITC roll-overs
  • Incorrect head reporting reconciliations lapsing tax credits
Invoicing & Documentation Lapses 
  • Gaps in maintaining accurate tax ledgers or accounts
  • Not issuing proper GST invoices within timelines
  • Non-compliance with e-invoicing and e-waybill norms
Other Procedural Non-compliances
  • No display of GST registration certificate
  • Non-submission of GST audit reports
  • Obstructing/delaying authorized GST officers

Conclusion

A sound financial control environment ensures risks from GST non-compliances are managed prudently without allowing gaps due to ignorance, errors or unreasonable constraints. Leveraging capable teams, robust tools and processes hence vital for sustained GST compliance.

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