10 Common Mistakes Made by Taxpayers While Filing GST Returns
Filing your Goods and Services Tax (GST) returns requires great attention, this is not like previous tax systems, like Service Tax and VAT, which allowed us for corrections or revisions after submission, the GST system does not have this option. Once you submit your GST return, you cannot change it. There are many ideas for changing this system, but this has not been implemented yet. This means you need to be more careful when filing your GST returns to avoid the problems and penalties that can happen while GST return filing.
In this blog, the Startupportal business services team shares some of the common mistakes that taxpayers make when filing GST returns. By recognizing these mistakes and knowing how to avoid them, you can make the filing process easy.
What is the GST return?
GST Return is a document filed by GST- GST-registered taxpayers to report their income/ sales and expenses purchases. It includes details of sales, purchases, input tax credit, output GST, and net tax liability. There are different types of returns with varying due dates.
Types of GST returns:
The GST system includes 13 types of returns, such as GSTR-1, GSTR-3B, GSTR-4, GSTR-5A, CMP-08, and ITC-04, each applicable based on business type and registration. Not all taxpayers must file every return; requirements depend on business activities. For businesses with a turnover over INR 5 crore, a reconciliation statement (GSTR-9C) is mandatory. Forms like GSTR-2A and GSTR-2B track Input Tax Credit (ITC).
Small taxpayers under the QRMP scheme can use the Invoice Furnishing Facility (IFF) for B2B sales, though they must still file monthly tax payments via Form PMT-06. Timely filing of the right forms ensures GST compliance.
Let’s explore,
Common mistake made by taxpayers while filing GST returns :
- Not Filing NIL Return When There is No Sell or Purchase: Many taxpayers believe that if there are no transactions in a particular month, they are not required to file a return. However, even with no sales or purchases, you must file a NIL return to avoid penalties.
- Errors While Invoice-Wise Uploading Data in GSTR-1: When filling out GSTR-1, each invoice must be uploaded individually. Errors during invoice entry, such as incorrect amounts, wrong GSTIN, or mismatched details, can cause issues in claim processing and reconciliation.
- Same GST Return Treatment for Zero-Rated & Nil-Rated Supply: A common mistake is treating zero-rated (exports) and nil-rated (taxable at 0%) supplies the same in GST returns. Zero-rated supplies allow you to claim an input tax credit (ITC), while nil-rated supplies do not. Misclassifying these can lead to errors in tax calculations and credits.
- Disclosure and Payment of Tax Under the Wrong Head of GST: Under GST, there are Four types of taxes: CGST (Central), SGST (State), UTGST (Union Territory) and IGST (Integrated). If the tax is paid under the wrong head, such as paying IGST instead of CGST/SGST or vice versa, it can complicate reconciliation and may attract penalties.
- Failure to Reconcile GSTR-1 and GSTR-3B: GSTR-1 contains invoice-wise details of outward supplies, while GSTR-3B is a consolidated summary of sales and purchases. Failing to reconcile these two forms can result in mismatches that could trigger scrutiny or penalties from the GST department.
- The Reverse-Charge Mechanism (RCM) Is Not Being Paid: The Reverse-Charge Mechanism applies when the buyer is liable to pay tax instead of the seller. Businesses often forget to account for RCM in their returns, leading to non-compliance and potential penalties.
- Entering Export Sales Details in the Regular Sales Column: Export sales are zero-rated under GST, and they need to be reported separately in the returns. Entering export sales under regular sales can lead to incorrect tax liability and may prevent you from claiming refunds on ITC for exports.
- Ignoring the Applicability of the Reverse Charge Mechanism (RCM): Businesses sometimes overlook transactions that attract RCM, which can lead to underpayment of taxes. It’s essential to evaluate whether any purchases require you to pay tax under RCM and report them correctly in your return.
- Not Charging the Correct GST Rate: With different tax rates applicable to other goods and services, taxpayers frequently make the mistake of applying the wrong GST rate. This can affect either underpayment or compensation of taxes, leading to compliance issues.
- Delay or Non-Filing of GST Return on or Before the Due Date: One of the most common mistakes is missing the due date for filing GST returns. Delayed form attracts late charges and interest, which can accumulate fast if returns are constantly late. Setting up reminders or automating the process can help ensure timely compliance.
Conclusion:
Avoid costly GST mistakes with Startupportal Business Services, our expert team is here to guide you through every step, from filing NIL returns to handling complex tax calculations and with other GST services too like GST registration , GST cancellation and more . Contact us and let us handle all your GST work.