Common Errors to be avoided in GST

Returns might be amended if there were mistakes under the previous Service Tax and VAT systems. GST does not, however, currently allow for the revision or amendment of a submitted return. A new mechanism for updating GST Returns is being discussed, although it has not yet been implemented. A taxpayer cannot modify his returns before that time. To prevent the hassle of pointless reconciliations, he must be particularly vigilant while completing his GST returns. This article focuses on the common mistakes that are to be avoided in GST. 

Key Abstract

Under the old Service Tax and VAT systems, returns may be corrected if there were errors. However, the GST does not yet permit the modification or alteration of a filed return. Although it has not yet been put into practise, a new system is being considered for amending GST returns. Before that deadline, a taxpayer cannot make changes to his returns. He needs to exercise extra caution while submitting his GST Returns in order to avoid the inconvenience of unnecessary reconciliations. Under the old Service Tax and VAT systems, returns may be corrected if there were errors. However, the GST does not yet permit the modification or alteration of a filed return. Although it has not yet been put into practise, a new system is being considered for amending GST Returns.

Meaning of GST Return 

The Goods and Services Tax (GST) was implemented in India on July 1st, 2017 with the goal of creating “One Nation, One Tax.” The Goods and Services Tax (GST) return idea was introduced with the implementation of the GST system in India. This document is used by taxpayers to report their revenue to the tax authorities. Each business entity must register independently under the GST regime and submit their GST return either electronically or manually.

According to the 37th GST Council Meeting, the new GST return method would be implemented in the GST system starting in April 2020. (In acceptance of the proposal from October 2019). 

Every business dealer and entrepreneur registered under the GST process is required to electronically or manually submit their GST Returns using the appropriate GST form.

The kinds and quantity of GST Returns that must be filed vary depending on the kind of taxpayer, such as a normal taxpayer, TDS deductor, composition dealer, Distributor(ISD), e-commerce operator, non-resident taxpayer, input service provider, and so on. An ordinary taxpayer must typically complete two monthly returns, GSTR-1 and GSTR-3B, as well as an annual return (GSTR-9/9C) for each GST registration separately, for a total of 25 GSTR to be filed in a calendar year.

A registered dealer must file a GST return, which generally includes:

• Buying
• Sales
• Output: GST (on sale)
• Input Tax Credit (GST paid on purchases).

People most often made certain errors in GST; let us discuss them in detail. 

Common errors in filing of GST Returns which needed to avoid

The following are the most common errors in filing of GST Return:

• Before the GST regime, there was a VAT system that allowed for the amendment of the return if an error was found. Despite the fact that the CGST Act, 2017 has been in force for three years now, those registered under it still make numerous mistakes while filing their GST returns. To avoid a departmental court case, it is important to file your GST return as accurately as possible.
• Since there is no provision in the CGST Act, 2017 to amend the return, we need to ensure that the GST return is correct at the time of filing.
• The assesse needs to be extra careful while filing the GST Returns to avoid further problems in the future.
• Taxpayers are required to file a VAT return. Since this is such a complicated operation, it is important to be careful about every entry made on the GST Portal. There is no way to correct the error. Make sure you are aware of the most common mistakes and avoid them.
• Below, we go through some of the most common mistakes people make when filling out their GST. Avoid these common mistakes while filing your GST return.

10 common errors in filing of GSTR returns which taxpayer needs to avoid

Following are the 10 common errors in filing of GSTR, which taxpayer should avoid:

• Errors while uploading Invoice-Wise data in GSTR-1: GSTR-1 requires invoicing details of all outgoing supplies to be uploaded, such as date of invoice, invoice number, place of delivery, rate of tax, etc. Due to the huge amount of data to be submitted, taxpayers sometimes make mistakes while entering. Such data and this will cause a mismatch between GSTR-1 and GST-3B. The taxpayer has to be very careful as there is no provision to revise the return after filing.

• Claiming an incorrect Input Tax Credit: GSTR-2a is an automatically generated return in which the relevant supplier declares the taxpayer’s purchases and the related input tax credit. On the other hand, the taxpayer is required to state the actual amount of his input tax credit separately while filing GSTR 3b. If a lower figure is published, there is no way to revise the return, and therefore the difference has to be paid along with interest in the next month’s return.

• Failure to file a NIL return: Many taxpayers are under the misconception that if they have no transactions to disclose for the tax period, there is no need to file a GST return. This could result in penalties for not filing or late filing returns. A taxpayer must file a zero-return even though they may not have any transactions to report for a particular tax period.

• Disclosure and Payment of tax under the wrong GST Head: There are several heads under which tax is reported while filing GST returns, like IGST, CSGT, SGST, etc. Many taxpayers make the mistake of entering GST liability or input tax credit under the wrong GST head. Even the tax is sometimes paid under the wrong heading at the time of making the payment, or interest is paid under the tax heading, and the like.

• Classification of Zero-Rated supplies as Zero-Rated and Vice Versa: A few taxpayers confuse nil-rate with zero-rate even though they don’t mean the same thing. In the case of a zero-rated offer, usually only exports and deliveries to SEZs fall into this category. However, in the case of zero fulfilment, all goods and services fall into this category, for which the tax rate is 0%. In the case of zero-rated transactions, the input tax discount cannot be applied.

• Due to the applicability of the Reverse Charge Mechanism (RCM): The government recently made things easier for businesses by restricting the use of reverse charge to certain notified goods and services. The government is constantly updating this list. Businesses need to be aware of and find out if any of these provisions apply to them. Suppliers whose goods or services are subject to a reverse charge should be careful not to pay GST on the same, which would result in double taxation.

• Cancellation of Input Tax Rebates and Blocked Credits: According to the law, ITC should be reversed in some cases, such as: input goods or services partly used for personal purposes; capital assets sold; free samples provided to consumers or business partners; loss of goods; destruction of goods; non-acceptance of goods or services; payment not delivered to suppliers within 180 days, etc.

• Place and Type of Delivery: Accordingly, taxpayers are required to aggregate B2C, zero-rated, tax-exempt, and non-GST supplies. The place of delivery should also be chosen correctly because the place of performance determines whether the performance is interstate or domestic.

• The correct GST Rate is not Charged: Every sale (“taxable supply”) is subject to GST once you register, unless it is an export or non-GST sale. Billing at a higher rate can cause a person problems and penalties. Charging a lower rate of GST can result in an out-of-pocket cash flow on assessment.

• Some other details like HSN, GSTIN, Invoice number: All invoices should include HSN/SAC. The number of HSN/SAC digits used by businesses varies depending on turnover. Along with the HSN/SAC, the taxpayer should ensure that the counter party GSTIN entered is correct or not.

Conclusion

The faults that were just mentioned are some of the most frequent ones made by GST Registered Persons. The penalties for breaking the GST legislation might cost you a lot of money. Therefore, it is strongly advised to adhere to all the regulations established by the GST law.

Taxpayers need to verify the mentioned checkpoints as well as additional checks to ensure proper GST Compliance and add value to the overall GST Structure of the entity or business. Furthermore, it is important to carry out regular checks and revisions to ensure that there are no problems at the end.