Even now, a few years after the GST’s implementation, many participants still make mistakes when completing their GST forms. Keep meticulous records when filing in order to prevent problems in the future.
Large fines and interest rates may result from incorrect GST return submissions. Before submitting your returns, double-check them because there is no going back to make changes. There were provisions for returning incorrect returns under the previous service tax and VAT systems. GST, however, currently does not have such a clause.
The new approach, which calls for changing GST returns, has not yet become law. Taxpayers are not yet permitted to alter their returns because it has not yet been included in the law. However, this won’t be a problem if he files his return carefully and is careful.
What are some common, avoidable errors in filing GST returns?
- Before the introduction of the GST, there was a VAT system that allowed situations of incorrect billing to be corrected. Despite the fact that the GST Act has been in force for three years, if you are registered for the GST, you must file your returns appropriately to prevent departmental lawsuits.
- It’s critical that we file returns accurately because there is no provision in the GST statute for amending a return.
- To prevent any further implications in the future, taxpayers must be extremely cautious while completing their GST forms.
- GST returns must be filed by taxpayers. It is vital to carefully read each entry made on the GSTN provision because these are far too sophisticated for the common person to understand. There is no way to fix a mistake after it has been made. Make sure you are familiar with the most common mistakes
Common GST Return Filing Issues that a GST-registered person must avoid while filing GST returns
Here are a few of the most frequent errors people make while submitting their GST filings. You must get guidance for your circumstances in order to avoid these typical GST return filing problems and errors.
These errors, which are listed below, fall under the following categories of GST tax errors made by Indians:-
1. Payment & Disclosure of GST Tax
It is crucial to provide information about the sort of tax you are paying when submitting the GST reports. It can be difficult to recall which of your company’s various GST heads—such as IGST, CSGT, and SGST—best describes the nature of your industry.
It is still possible to get a GST issue fixed, such as paying tax under the incorrect category. For instance, interest on taxes paid is frequently incorrectly adjusted. The GSTN is now unable to handle tax payments or refunds due to the ban on interchangeability. Your working capital situation could increase as a result of the uncertain cash flows that could result.
2. Wrongly claiming all input tax credit
Suppliers are required to record their purchases from the taxpayer using their input tax credit on an automatically issued GSTR-2A form. On the other hand, a taxpayer must complete their return form and indicate the input tax credit they wish to claim.
Additionally, they must submit and make claims for the proper amount of input tax credit. Once you’ve submitted your return, you can no longer make changes or request additional credits. If you do, the difference must be paid together with additional interest on your subsequent tax return.
3. Delay while Submitting your GST return
In order to avoid having your registration canceled by the tax authorities, it is crucial to submit your annual GST return on time. Financial penalties are also assessed for late filings. penalties similar to those that can be imposed on companies that consistently submit their returns late.
4. Not charging the right GST Rate
In Australia, if you own a business, the GST will be charged on all sales that are not exported or qualified for input tax credits. To avoid fines, make sure the right GST rate is applied. By reducing the GST rate before assessment, you can end up paying less out of your pocket overall. It’s recommended periodically check for a list of the GST rates for various things.
5. Considering Export sales in the column of daily sales
In Australia, if you own a business, the GST will be charged on all sales that are not exported or qualified for input tax credits. To avoid fines, make sure the right GST rate is applied. By reducing the GST rate before assessment, you can end up paying less out of your pocket overall. It’s recommended periodically check for a list of the GST rates for various things.
6. Making errors while uploading data invoice-wise in GSTR-1
All outgoing supplies must be supplied with invoice-level data, including the date, number, location of the supply, and tax rate, according to GSTR-1 regulations. The amount of data that taxpayers must enter causes them to occasionally make mistakes. A mismatch, for instance, could exist between GSTR-1 and GSTR-3B. It cannot be changed later, so exercise caution.
7. Delay in making payment of Reverse Charge mechanism (RCM)
On specific products or services, reverse charge tax is necessary. A list of the items that need reverse charge tax will be provided someplace on the invoice. When dealing with RCM, taking advantage of ITC should be a top priority since if your business doesn’t pay this, it could cost quite a bit in interest payments and input tax credit decreases.
We may state that the sole way to pay GST under the Reverse Charge method is by challan. A GST-registered individual can claim ITC for the RCM challan with their output tax after making the required payment.
8. Avoiding reconciliation of GSTR 3B & GSTR 1
Before submitting the GST Return, the person must ensure that the GSTR 3B and GSTR 1 returns are identical. You may do this by reviewing the consistency of your reports once a month.
A business may be subject to legal action from the GST department if it declares sales of Rs. 2 crores in its GST return for May 2020 and sales of Rs. 2.50 crore in GSTR1 for the same month.
9. Ignoring GSTR 2A before claiming ITC on GSTR 3B return
By GST Rule 36(4) stated in the law, you can only claim an ITC credit of 110 % of your qualifying ITC as shown on form GSTR-2A or as per books, whichever is lower.
10. Separating Zero Rated & Nil rated to supply the matching or vice versa
People frequently mix up 0-rated and nil-rated supplies. Let’s look at how they differ. For items that are nil-rated, the GST rate is 0.0%. Because they are exported from India or are situated in a Special Economic Zone, they are taxable but do not incur sales tax.
Zero-rated supplies are taxable but have a GST rate of zero (0)% in the GST tariff because they are exported out of India or going to a Special Economic Zone; these supplies are exempt from GST. The claim for a refund won’t be acknowledged if someone gives the government zero-rated supplies but declares them as nil-rated products on their tax return.
11. Not claiming your TCS & TDS
- It has been observed on numerous instances that taxpayers are unaware of the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) data required while submitting GST forms. Residents frequently make errors when finishing them.
- When the total value of the supply in a contract exceeds 2.5 lakh Rupees, tax is deducted at source by the Central Government, State Governments, Government Agencies, and Local Authorities as well as Notified Persons under the GST Scheme.
- Direct deposit of the TDS into the government’s credit account is required so that it can be claimed. Your Electronic Cash Ledger will record this as a receipt that you can use to settle any GST obligations.
- The e-commerce operator is liable to collect 1% of the net value of the supplies on behalf of the provider if the supplier distributes taxable supplies through an e-commerce platform that also receives payment for those supplies.
- Your TCP must be placed into a government credit account before the beneficiary can make a claim for repayment if you possess TCS shares. The company’s electronic cash ledger will show this. Then, we can use this to settle all of their debts, including the reverse charge debt, related to GST.
- TDS/TCS and income tax are frequently confused by taxpayers, who estimate them in their forms. Your financial situation may be greatly impacted by this.
12. Reversal of ITC and Blocked Credits
In some situations, such as when suppliers are not paid within 180 days, when inputs are partially used for personal purposes, when capital goods are sold, when free samples are given to customers or business partners, when things are destroyed, etc.,
Revocation of the Input Tax Credit is necessary. For instance, you might not be able to get credit for all transactions. Taxpayers need to think about the repercussions of filing the same claim. If you don’t follow the rules, the GST department may send you notices, which could result in further fines and interest.
13. Consider a few other things like GSTIN, Invoice No, HSN
On every invoice, there must be a GSTIN, an invoice number, and an HSN/SAC. Depending on their annual revenue, different companies utilize different numbers in their HSN/SAC. The taxpayer should make sure to provide a GSTIN that is accurate together with the HSN/SAC.
Each tax invoice that a registered person issues must include a sequential serial number that is no longer than 16 characters long, divided into one or more sequences, and contains letters, numbers, and special characters.
14. Paying GST in the wrong Category
Numerous studies indicate that the businesses that complained loudest about paying the incorrect GST category did not know how to classify their operations when they filed their returns. Asking your accountant how to categorize your GST before filing is one method to prevent this.
If your return is meant to be filed under the State Goods and Services Tax, don’t file it under any other category (SGST). The steps to take before filing your taxes are covered in this article’s preparation tips for the 2010 GST season.
The IGST tax will be applied to all transactions that transcend state lines, while the CGST+SGST tax will be applied to all transactions that take place within a single state.
Advice: You cannot carry over and use the unused IGST against future payments.
Read More: THE DRAFT COMMON ITR FORM IS OUT — DOES IT SAVE YOU THE HASSLES?
15. Delay in Submitting your NIL return
Some taxpayers believe that if they don’t have any transactions, they don’t need to file a GST return with their tax filing. Even when there are no transactions to report, penalties may be assessed for failure to file taxes. Due to the fact that you cannot submit documents to the GSTN if any prior returns have not been filed, doing this would also enable you to submit your taxes (GST) more promptly.
Conclusion
When submitting GST returns, it’s crucial to stay away from problems and errors. The examples I provided are only a few of the many ways you could miscalculate GST. One clear error is failing to claim TDS and TCS, which results in a loss for the party responsible for paying them.
Make sure you take into account all of the GST reports that are available before filing your GST return. When paying taxes, it’s crucial to input information precisely and completely whenever it’s required in order to prevent financial damages. Before you even begin the process, it’s a good idea to consult with a Chartered Accountant in India.