7 Mistakes to avoid while filing GSTR (Goods and Service Tax Return)
January 5, 2023
What is GST Return? And Mistakes to avoid while filing GSTR
Table of Content
Taxpayers must be extremely cautious when filing a GST return in order to avoid the inconvenience of unnecessary reconciliation. So, let’s take a look at some of the most common mistakes to avoid while filing GSTR (Goods and Service Tax Return). Before concentrating on mistakes to avoid while filing GSTR, Let’s first discuss What is GST Return and the different types of GST returns.
What is GST Return?
A GST return is a document that contains information about all income/sales and/or expenses/purchases that a GST-registered taxpayer is required to report to the tax authorities. A registered dealer is required by GST to file GST returns that broadly include:
- ITC (GST paid on Purchase)
- Output GST (on sales)
Different types of returns under GST (Goods and Service Tax)
There are 13 GST returns. GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, GSTR-9, GSTR-10, GSTR-11, CMP-08, and ITC-04 are the codes. However, not all returns apply to all taxpayers. Returns are filed by taxpayers based on the type of taxpayer/type of registration obtained. Taxpayer that has turnover of more than INR 5 crore, must also file a self-certified reconciliation statement in Form GSTR-9C.
Taxpayers can obtain statements of Input Tax Credit, known as GSTR-2A (dynamic) and GSTR-2B (static). Small taxpayers registered under the QRMP scheme can also use the Invoice Furnishing Facility (IFF) to provide their Business to Business (B2B) sales for the first two months of the quarter. These small taxpayers will still be required to file monthly returns on Form PMT-06.
7 Mistakes to avoid while filing GSTR (Goods and Service Tax Return)
Below are the major 7 errors that taxpayers make, either knowingly or unknowingly, when filling out their GST returns:
1. Avoiding the filing of a GST return in the absence of a sale or purchase
The majority of people believe that if there are no transactions for sale or purchase, there is no need to file a NIL return. But that is not the case. According to GST Law, even if no transactions occur during a tax period, a person registered under GST is required to file a NIL return. Non-filing of a NIL GST return results in a monetary file, and the department issues a notice to cancel the GST registration due to non-filing of a GST return.
2. GST return treatment for Zero rated and Nil rate supply is the same
Many registered users consider zero-rated and nil-rated supplies to be the same. However, there is a significant difference between zero and nil rated supplies. Nil rated supplies are those that are taxable but have a GST rate of 0% in the GST tariff because the goods and services are exported out of India or are located in a Special Economic Zone (SEZ). If a person supplies zero-rated supplies but declares them in a column of nil-rated supplies on his GST return, he may encounter difficulties when claiming a refund for zero-rated supplies. On the other hand, if a person declares his nil rated supplies in the zero-rated column, he may face problems during the department’s audit and scrutiny. To avoid unnecessary litigation, a person must be cautious when filing nil and zero rated supplies in his GST Return.
3. Ignoring GSTR 1 and GSTR 3B reconciliation
If a registered person fails to match his GSTR 3B and GSTR 1 returns on a monthly basis, he is making a serious error. Before filing GST returns, each individual should ensure that their GSTR 3B and GSTR 1 returns are monthly matched.
4. Failure to pay the Reverse Charge mechanism (RCM)
The government has prescribed a number of goods and services for which recipients must pay a reverse charge. Failure to pay reverse-charge tax may result in additional interest payments and the loss of input tax credit. It should also be noted that reverse charge tax cannot be paid using Input Tax Credit (ITC). In other words, it must be paid by challan. After paying the Reverse Challan, taxpayers can claim input tax, which can be offset against output tax.
5. Incorrectly entering invoice details when filing GSTR 1
When the recipient of goods and/or services provides his GST number to the supplier of goods and/or services, the supplier is required to enter the recipient’s invoice details. Invoice-level information provided by the supplier in GSTR 1 is auto-populated in form GSTR 2A, allowing the recipient to claim input tax credit for GST tax paid to the supplier. If the supplier feeds the incorrect invoice and/or fails to report the invoice, the recipient may be denied the input tax credit for the invoice that was incorrectly declared in the GSTR 1 return. The following are some common errors that a supplier may make when entering an invoice for a GSTR 1 return:
- Incorrect invoice number was mentioned.
- Using an incorrect date.
- B2B sales are included in B2C sales.
- The IGST tax is incorrectly shown as CGST and SGST, and vice versa.
The above errors in GSTR 1 returns may deprive the recipient of the right to book Input Tax Credit (ITC).
6. Declaring export sales in the regular sales column
If a person declares export sales in the column of regular sales instead of zero-rated supplies, the GST refund may be denied. As a result, when providing information about export sales, one must exercise caution.
7. Delay or not filing of GST return on or before due date
The importance of filing GST returns on time cannot be overstated. Failure to file GST returns on time may result in the cancellation of your GST Registration, and it also results in financial penalties.
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