GST Compliances – Do’s and Don’ts

In the last couple of years traders across the industries has received GST notices for multiple issues. While going through some of those notices personally or discussing the same with our friends and traders it is observed that good number of these notices could have been avoided by implementing few SOP’s and by taking some basic precautions at the time of filing the return.

In this article we will try to highlight certain points that can help the readers to avoid such notices for future years.

Do’s and Don’ts of GST Compliances

• Report same sales and GST liability figures in GSTR 3B and GSTR 1. Difference if any in sales numbers at the time of filing of GSTR 3B as compared to numbers of GSTR 1 should be handled by way of amendments only.
• Take ITC as available in GSTR 2B. This may have an impact on your working capital in the short run, but it will save you from unnecessary litigation and also on interest and penalty cost.

Rather than taking ITC as available in books, it will be advisable to design a system where you can track the difference between GSTR2B and books, do the follow-up and bring the difference to negligible or manageable level.

• Design a system where values reported in returns are reconciled with books on monthly and cumulative basis. Sales Values, Balance in cash and credit ledger, payment amount, ITC availed – these are few numbers that should be reconciled on a regular basis. Prepare your GST working in a manner to mitigate these requirements easily.
• The balance in cash ledger or credit ledger on portal, if any, should match with that in the books. Cash payment, if any, as per challans on the portal should match with the payable amount shown by the books. Any differences in these numbers will lead to erroneous reporting in the return which may further result in loss of credit or short payment of liability.  Further this will also result in maintain additional reconciliations at the year end to tally the amounts.
• There are certain credits which are ineligible and cannot be claimed or can be partially claimed. Reverse this ineligible and blocked credit as mention in the act on timely basis. This will save interest and penalty costs.
• Same goes with GST Liability on reverse charge mechanism. Discharge the GST liability on expenses on which RCM is applicable to avoid interest payments.
• Some of the traders has a practice of issuing E-way bill and cancelling them on will. Make no mistake this data on E-way bill is available with the department and will be matched with your reported sales numbers. Any major differences may result in litigation.
• Further keep a mechanism or trail as to track all the amendments made to invoices on either your end or supplier’s end so that the same can be adjusted on timely manner and avoiding any mismatch in liability or ITC availment.
• Keep in mind the time limits to claim any ITC or discharging any liability belonging to prior return periods. Any ITC claimed after such due dates can lead to additional interest and penalty costs, same applies to any short or pending liability discharged.

Rohan Mehta – [email protected]

Disclaimer: The information is of a general nature and is not intended to address specific facts and circumstances. The author of this article shall not be liable in any manner whatsoever for any action taken relying on information contained here. Readers must seek independent advice and not act upon information contained here.