Dear Friends, after the introduction of GST in July 2017, starting a business in India becomes so easy that, even an uneducated person can start his business with the help of an Accountant (Book-Keepers). Due to which, many new business has been started but due to lack of knowledge at Promoter level as well as Accountant’s level, who are not very well aware about the GST Law and its compliances, after some time, they becomes defaulter under GST Law due to lack of awareness about law and its consequences in case of default. After the implementation of GST law, some common errors/ mistakes are still done by many dealers, which may cause very heavy consequences in near future. With this article, I am focusing on some common errors, which dealers are doing and which need to be corrected as soon as possible.

1. Wrong Invoice format and Wrong Tax Calculations – At the time of Auditing of firms, it was commonly observed that, the traders are not issuing invoices in the format at specified by the department, like in many cases, place of Supply is not mentioned, wrong GST number of buyer is mentioned in the Invoice Etc. Traders should take care of theses error, because issuing of wrong GST Invoice may cause denial of input tax credit to the receiver/ buyer or may attract penalty from department as well. In many cases, Dealers are charging CGST/SGST when they are required to charge IGST.

2. Non Mentioning of HSN Code in GST Invoice – As per GST Law, all entities whose Annual Turnover in the preceding financial year is more than Rs.1.5 Crores is required to display HSN Code while issuing their invoices. However, in many cases, registered persons are not complying with this requirement.

3. Non Issuance of E-Way Bill – As required by law, every dealer has to generate E-Way bill in case of Interstate transaction if Invoice value is greater than Rs.50,000/-. However, due to lack of checking, dealers are not complying with this requirement, which can be easily tracked by govt. from GSTR-1. This practice should be corrected as soon as possible, because it invites heavy penalty.

4. Display of GST Number  at business Premises– As per requirement of  GST Law, every registered person is required to display, name of its firm, Address of firm and GST number to the business place. However, maximum persons are not obeying with this requirement.

5. Non Filing of GST Return– This is the blunder, which maximum new entrepreneurs are doing right 5. now. Due to easiness of issuance of GST Registration, they just registered under GST Law and from next month onwards become defaulter by not filing of GST Return, which attracts Rs.50/- per day penalty, which after couple of months become so huge that, its becomes impossible for him to come back in the main stream. And then, becomes voluntary defaulter.

6. Filing of Either GSTR-3B or GSTR-1– It was another common mistake, that many traders are doing right now. They are taking services of that Accountants, which are not even aware about, which returns are required to be filed under GST Law. They are just file GST-3B on monthly basis and not filing GST-1. Due to which the opposite party is not getting credit of the GST Paid.

7. Taking Input Tax Credit without Invoice – As per GST Law, it is mandatory that, you should hold a valid GST Invoice while taking GST Credit. However, during the audit process, it was observed that, many dealers are taking credit without having valid GST Invoice or availing ineligible GST Input.

8. Getting Input Tax Credit on the Basis of Bogus Bills– As per news/ TV reports, many dealers are buying bogus bills from dealers to take GST Credit, which may face many litigations in near future, as the GST Department is starting investigation in cases, where GST Dealers has paid off their GST liability with the help of GST Credit. If one dealer is found guilty in such kind of scam whole chain will be detected very easily by the use of latest technology. So, such kind of unethical practice should be stopped or should not be involved at any stage.

9. Selling Products under Lower rate bracketOne more common error done by dealers, to get huge margin and to get rid of competition is that, they are selling a product of higher tax rate at lower tax rate. The dealers will feel heat of this practice very soon while filing, GSTR -9 because in this form dealer has to provide detail of Inward supply made with their HSN Code, by which these dealers can be easily tracked by department.

10. Filing of Final Return– This is the error which mostly GST Cancelled dealers are doing. As per law, when registration of GST Dealers is cancelled, then they have to file GSTR-10 Final return within 3 Months from the date of Receipt of cancellation order. In case of default in filing GSTR-10, Rs.200/- per day penalty will be levied.

11. Filing of Annual Return– As per GST Law, every GST Registered person has to file an Annual return after the closing of each financial year within 6 Month of closing of financial year.  For F.Y -2017-18, due date of filing of GST Return has been extended till 30/06/2019. It must be taken care that, every registered person has to file Annual return even when his GST Number has been cancelled.

These are the some common mistakes which GST Registered persons are doing, due to lack of inadequate knowledge at their level as well as their accounting person level. Please note that, in GST law, consequences of default are very costly. So, it is advised to dealers that, if they are doing above mentioned mistakes then, kindly correct them.

This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not be used for rendering any professional advice. This article is written on the basis of author’s personal experience. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of other readers.

The author can be reached at – 9911303737/ 9716118384 and E-Mail – [email protected]    

Author Bio

Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, New Delhi, IN
Member Since: 03 Dec 2018 | Total Posts: 53
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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  1. sada nanda nanda says:

    Dear Sir,

    To avail input credit is it mandatory that seller should have filed all the returns? and how to ensure that tax amount has been remitted.

    Thanks and regards.

    1. shiv786 says:

      Dear Sir, Your Question is not giving Clarity about your exact pain area. Pls, Give us a call @- 9911303737 to get the proper solution of your Query.

  2. baidyanath says:

    Sir, if any one registered under gst for doing trading of any product , but he is a engineer so also raised the invoice for technical support services in individuals name, can he raised the technical support service charges bills in individual name without mentioning gst no or mandatory to mentioned after registering under gst that type of person can raise only tax invoice either they are doing technical support service to any organisation.

  3. AK Menon says:

    “even an uneducated person can start his business with the help of an Accountant”
    “due to lack of knowledge at Promoter level as well as Accountant’s level, who are not very well aware about the GST Law and its compliances, after some time, they becomes defaulter under GST Law due to lack of awareness about law and its consequences in case of default”

    Aren’t rhese two sentences contradicting ? on one hand you say that GST is so easy that even an uneducated person also can start and run the business, on other hand you say they are becoming defaulter due to lack of awareness, i beg to subit that it is not the lack of awareness but the changes being made by department on everytime, moreover the unpreparedness of GST itself is created the type of confusion.

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March 2021