GST Compliance Checklist for FY 2026-27: Top 10 Essential Checks
Here’s What You Should Know
India’s indirect tax system demands strict GST compliance from every registered business. With FY 2026-27 approaching, businesses must review critical filings and internal controls. Ignoring GST compliance can lead to 18 percent interest, penalties under Sections 73 and 74, and ITC blocking.
This checklist helps you stay audit-ready and penalty-safe.
What Are the Top GST Compliance Checks for FY 2026-27?
GST compliance is not just about filing returns. It includes reviewing turnover, updating invoices, reconciling credits, and ensuring proper declarations. Based on compliance trends across Indian businesses, most notices arise due to reconciliation errors and missed deadlines.
Below are the top 10 essential checks every business must complete.
1. File LUT for Zero-Rated Supplies
Exporters must file a Letter of Undertaking before supplying without payment of tax.
Due date: 31 March 2026.
Failure to file LUT may require tax payment first and refund claims later.
2. Opt for Composition Scheme (If Eligible)
If turnover is within prescribed limits under GST law, businesses may opt for the Composition Scheme.
File CMP-02 by 31 March 2026.
As per GST portal guidelines www.gst.gov.in, delayed filing may restrict eligibility for the financial year.
3. File ITC-03 for Composition Transition
If switching from a regular to a composition scheme, file ITC-03.
Due date: 30 May 2026.
This form reverses the input tax credit on stock and capital goods.
4. Choose QRMP Scheme
Eligible taxpayers can opt for the Quarterly Return Monthly Payment scheme.
Due date: 30 April 2026.
QRMP reduces filing frequency but requires disciplined monthly tax payments.
5. Collect GTA Declarations
Businesses paying freight under the Reverse Charge Mechanism must collect proper GTA declarations.
Improper documentation can trigger RCM disputes during assessment.
6. Reset Invoice Number Series
Invoice numbering must restart from 1 April 2026 for the new financial year.
Incorrect invoice series may result in compliance mismatches.
7. Recalculate Aggregate Turnover
Aggregate turnover determines:
- Composition eligibility
- E-invoicing applicability
- QRMP eligibility
Incorrect calculations may lead to wrong compliance decisions.
8. Reconcile ITC
Match GSTR-2B with GSTR-3B every month.
Non-reconciliation is one of the primary reasons for ITC blocking under GST compliance monitoring.
9. Settle RCM Liabilities
RCM tax must be paid through GSTR-3B.
Delayed payment attracts:
-
Interest at 18 percent per annum
-
Possible penalty under Sections 73 or 74
10. Update HSN Codes
Businesses must correctly report HSN codes in B2B and B2C invoices.
Incorrect HSN reporting may result in departmental notices.
Why Is GST Compliance Important for Indian Businesses?
GST compliance directly affects working capital and business credibility.
Non-compliance can lead to:
-
Departmental notices
-
ITC blocking
-
Interest at 18 percent
-
Penalty under Section 73 or 74
-
E-Way bill restrictions
Strong GST compliance reduces audit risk and protects cash flow. Businesses that fail to reconcile ITC regularly should consider professional GST return filing services to avoid ITC blocking and penalties.
What Are the GST Compliance Penalties in India?
GST compliance failures directly impact cash flow and operations. The law prescribes interest, late fees, and penalties depending on the nature of default.
As per provisions available on the GST portal www.gst.gov.in, the following consequences apply:
|
Type of Default |
Penalty or Consequence |
|
Late filing of GSTR-3B or GSTR-1 |
Late fee of Rs 50 per day (Rs 20 per day for Nil return), subject to maximum limits |
|
Delayed tax payment |
Interest at 18 percent per annum |
|
Excess or wrong ITC claim |
Recovery of ITC with 18 percent interest and penalty |
|
Section 73 cases (non fraud) |
Penalty of 10 percent of tax amount or Rs 10,000, whichever is higher |
|
Section 74 cases (fraud or suppression) |
Penalty up to 100 percent of tax amount |
What Is the Difference Between Section 73 and Section 74?
Section 73 applies when tax is short paid without fraud or intentional suppression.
Section 74 applies in cases involving fraud, willful misstatement, or suppression of facts.
The financial exposure under Section 74 is significantly higher. Businesses must maintain strong GST compliance records to avoid classification under fraud provisions.
How Can Businesses Avoid GST Penalties?
Businesses should:
-
Maintain monthly reconciliation records
-
Track due dates in advance
-
Review turnover thresholds quarterly
-
Keep RCM documentation complete
-
Conduct internal GST health checks
Technology-driven GST compliance systems reduce manual errors and improve tracking accuracy.
How does Ebizfiling support GST compliance?
- We review your GST registration and filing history.
- We prepare and file returns accurately before deadlines.
- We reconcile ITC with GSTR-2B and GSTR-3B.
- We assist in LUT filing, CMP-02, and ITC-03 submissions.
- We guide you in avoiding notices and penalty exposure.
Our motive is to help you stay compliant with structured processes and continuous monitoring.
Conclusion
GST compliance in FY 2026-27 requires careful review of returns, reconciliation, and scheme selection. Even small errors can lead to 18 percent interest and ITC blocking. Businesses that follow a structured GST compliance checklist reduce risk and operate confidently. With expert support from Ebizfiling, compliance becomes systematic and controlled.
Suggested Read:
Section 73-74 of the CGST Act explained.
GST Software for Beginners: A Simple Guide.
Skills GST practitioners should upgrade to in 2026.
FAQs
1. What is GST compliance?
GST compliance means fulfilling all obligations under GST law, including registration, return filing, tax payment, reconciliation, and maintaining proper records.
2. What happens if GST returns are not filed?
Non filing may lead to late fees, 18 percent interest on tax liability, ITC blocking, and suspension of GST registration.
3. What is the interest rate on delayed GST payment?
Interest is charged at 18 percent per annum on delayed tax payments as per GST provisions.
4. What is the penalty under Section 73 and 74?
Section 73 applies to non fraud cases and may attract penalty and interest. Section 74 applies in cases involving fraud or suppression and carries higher penalties.
5. Why is ITC reconciliation important?
Mismatch between GSTR-2B and GSTR-3B may lead to ITC reversal or blocking. Regular reconciliation ensures accuracy.
6. What is QRMP scheme under GST?
QRMP allows eligible taxpayers to file returns quarterly while paying tax monthly.
7. When should LUT be filed?
LUT must be filed before exporting goods or services without payment of tax for the financial year.
8. What is Reverse Charge Mechanism?
Under RCM, the recipient of goods or services pays GST instead of the supplier in specified cases.
9. Why is aggregate turnover important in GST compliance?
Aggregate turnover determines eligibility for schemes, e invoicing applicability, and compliance category.
10. How can a business improve GST compliance?
Businesses can improve GST compliance by maintaining proper documentation, reconciling monthly, reviewing turnover, and seeking professional guidance.
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