Since the introduction of the GST in India about three years ago, most accountants and businesses have gotten the hang of this new tax structure, but some are still adjusting. Additionally, the government frequently releases new updates, increasing the complexity of the situation. Taxpayers must always stay current in order to assure compliance and prevent notices from being sent to them. The following are some Dos and Don’ts that every GST taxpayer should be aware of:
Dos
File Your GST Returns In Time
There are numerous returns and forms that must be completed or submitted under GST, unlike the former indirect tax regulations that were in effect. Making sure that all GST returns are filed by the due dates is one of the simplest compliances that can assist a business avoid interest, late penalties, and notices.
Upload Accurate Data In GSTR-1
The GSTR-1 return has a large number of fields that must be completed. Once a return is filed, the GSTN does not permit its alteration. Even though this is difficult for the taxpayers, a little caution while entering the data will guarantee that no reconciliations and rectifications are required in the returns of later months.
Maintain Appropriate Records
This is necessary for the GST audit. Even though they are not subject to a GST audit, all firms should adopt the good practise of keeping accurate records for the GST. This could refer to payment challans, fixed asset registers, buy and sale registers, e-way bills, etc. If proper documentation is kept, the reconciliation process will go much more smoothly in the event of a notice of scrutiny or even at the time of closing the books of accounts.
Conciliate your tax returns with your accounting records
Businesses should perform this crucial activity on a monthly basis rather than delaying it until the end of the year to reconcile the returns filed with their books of accounts. Identification of any inaccuracies and omissions would be made possible by the timely reconciliation practise. This can be changed in the return for a following month rather than at the end of the year, saving interest and, if applicable, penalties.
Notify the GST authorities of any changes to your company
Any modifications made to the information provided with relation to a person’s registration must be reported to the GST authorities by all registered persons as required by the GST statute. Any such changes must be reported to the authorities within 15 days. The application and all required paperwork should be uploaded to the GST portal.
Get Your GST Audit Done If Your Revenue Is Over 2 Crores
Every registered dealer must have their finances audited by a CA or a CMA if their annual revenue exceeds Rs 2 crore. Along with his audited accounts and reconciliation statements, he must also submit his audited returns.
Don’ts
Make Tax Payments Using the Wrong GST Head
Sometimes taxpayers make the error of paying tax under the incorrect GST head, or under the tax head for interest, and so forth. Given that the GSTN forbids the inter-utilisation of taxes, one should exercise particular caution when processing GST payments. Therefore, payments made under the incorrect tax headings would result in a poor working capital.
Nil-rated supplies should be categorised as zero-rated supplies, and vice versa
Users frequently classify zero-rated supplies as nil-rated and vice versa, which is an error. Export supplies and supplies made to SEZs are considered zero-rated supplies, whilst nil-rated supplies have a 0% tax rate. Nil-rated supplies cannot be eligible for input tax credit, so users should be careful when inputting information in GST forms.
Never Submit Your Nil Return
Taxpayers occasionally have a tendency to overlook this extremely crucial feature. A user must remember to submit a NIL return for any period in which a business had no transactions. Additionally, this would make it easier to file future returns, which the GSTN prohibits in some circumstances where past-due taxes have not been filed.
Use the incorrect tax rates
Regular notifications from the government include the most recent tax rates as proposed by the GST council. All firms must pay GST at the current rates and keep track of these rate changes. Depending on whether input tax is claimed or not, many goods and services have different rates. Every time an invoice is sent, the person sending the GST invoices should make sure to charge the appropriate tax rate.
If tax is due, pay it using a reverse charge
This applies to all companies whose invoices must have reverse-charged GST. Such enterprises must determine if the recipient must pay a reverse-charge and must not include GST in the invoice price. When the recipient bears the responsibility, this can prevent the needless hardship of depositing the tax twice and the second payment of tax.
Use an ineligible input tax credit claim
Input tax credit may not be used in certain circumstances, including failure to pay suppliers within 180 days, partial personal use of inputs, sales of capital goods, distribution of free samples to clients or partners in commerce, destruction of goods, etc. The rules governing the input tax credit must be followed by taxpayers. Any improper use of an input tax credit could result in the GST administration sending out notices.
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