Introduction:
When you get a GST registration, your main responsibility is to record all your business transactions properly and file returns on time. In simple terms, whatever you sell (income) and whatever you buy (expenses) should be clearly recorded with proper bills or invoices. Maintaining basic records regularly will help you avoid last-minute confusion and errors.
1. Types of Return:
Under GST, there are mainly two returns that need to be filed – GSTR-1 and GSTR-3B.
GSTR-1 is used to report complete details of your sales, including invoices issued to customers (both registered and unregistered), export sales, and any credit or debit notes. These details are important because they help your customers claim input tax credit.
GSTR-3B is a summary return where you declare total sales, purchases, input tax credit, and GST payable. This is also the return through which you pay your GST liability.
If your turnover is up to ₹5 crore, you can opt for the QRMP (Quarterly Return Monthly Payment) scheme. Under this scheme, GSTR-1 and GSTR-3B are filed once in a quarter. However, if there is any tax liability, GST must still be paid every month for the first two months of the quarter.
The filing frequency depends on your turnover. If your turnover is up to ₹5 crore, GSTR-1 and GSTR 3B can be filed quarterly (under QRMP), however GST liability should be paid monthly. If your turnover exceeds ₹5 crore, both returns must be filed monthly. Even if there is no business activity in a period, it is mandatory to file a Nil return to avoid penalties.
| Return | What to Do | Monthly Filing | Quarterly Filing | Due Date (Simple) |
| GSTR-1 | Report sales | Yes | Yes | 11th (monthly) / 13th (quarterly) |
| GSTR-3B | Pay GST + summary | Yes | Yes | 20th (monthly) / 22nd or 24th (quarterly) |
2. Calculation of GST
GST is calculated in a simple way. The tax you collect from customers is called output tax, and the tax you pay on your purchases is called input tax credit (ITC). Your final tax payable is the difference between these two. If output tax is higher, you pay the balance to the government. If input tax is higher, no payment is required and the excess can be carried forward to the next period.
Example:
Suppose you sell a service for ₹10,000 and charge GST @18% = ₹1,800. This ₹1,800 is your output tax.
Now assume you already paid ₹800 as GST on your business purchases. This becomes your Input Tax Credit (ITC). So, your final GST payable will be ₹1,800 – ₹800 = ₹1,000.
3. Forward and Reverse Charge Mechanism:
Forward Charge Mechanism is the normal system where the seller charges GST from the customer and pays it to the government. It means the responsibility to collect and pay tax lies with the seller. This is the standard method used in most business transactions.
In some cases, GST is payable under Reverse Charge Mechanism (RCM), where the buyer pays GST instead of the seller. This generally applies to services like advocate fees, goods transport agency (GTA), import of services, and certain director payments. GST under RCM must be paid in cash and can later be claimed as input tax credit if eligible.
4. Input Tax Credit:
Input Tax Credit (ITC) means the GST you already paid on your business purchases, which you can reduce from the GST you have to pay on your sales.
For example, if you paid GST while buying something for your business, you don’t have to pay that portion again—you can adjust it against your output tax and pay only the balance.
To claim ITC certain conditions must be met.
1. The invoice should appear in GSTR-2B,
2. The expense should be related to business, and it should be allowed under GST rules. ITC is not available on some expenses like personal use items, food and beverages, motor cars for non-business use, club or gym expenses, gifts or free samples, and most construction-related expenses.
5. Essential factor that should be included in a GST sales Invoice
Basic Details
- Supplier (your) business name, address, and GSTIN
- Invoice number (unique and continuous)
- Invoice date
Customer Details
- Customer name and address
- Customer GSTIN (only if registered)
- Place of supply (important for tax type)
Goods / Service Details
Description of goods or services
- HSN (for goods) / SAC (for services) code
- Quantity (if applicable)
- Rate per unit
- Total taxable value
Tax Details
- Applicable tax type:
- CGST + SGST (same state) OR
- IGST (different state)
- Tax rate (%) and amount separately
Final Amount
- Total taxable value
- Total GST amount
- Total invoice value (including tax)
Other Important Details
- Whether Reverse Charge (RCM) is applicable
- Signature / Authorized signatory
Author Bio
a well researched article in fluid easy to read and understandable language