10 Common GST Mistakes & How to Avoid Them

The Goods and Services Tax (GST) reduced India’s tax structure, replacing multiple indirect taxes. However, businesses often make costly errors when filing GST returns or handling compliance. These mistakes can lead to penalties, interest charges, and even legal complications. Understanding these common GST mistakes and knowing how to avoid them can help businesses stay compliant and financially stable.

1. Incorrect GST Registration

Mistake: Many businesses either delay GST registration or register under the wrong category, leading to compliance issues.

How to Avoid:

• Register for GST as soon as your business crosses the threshold limit.
• Choose the correct category, whether Regular Scheme or Composition Scheme.
• Ensure that details like PAN, business address, and nature of business are entered correctly.

2. Errors in GST Return Filing

Mistake: Filing incorrect details in GST returns, such as incorrect invoice amounts or mismatched tax credits.

How to Avoid:

• Double-check all invoices before filing GST returns.
• Use GST-compliant accounting software to avoid miscalculations.
• Reconcile GSTR-1, GSTR-3B, and GSTR-9 data properly to prevent mismatches.

3. Non-Filing or Late Filing of Returns

Mistake: Many businesses forget to file returns on time, resulting in penalties and loss of input tax credit (ITC).

How to Avoid:

• Maintain a GST compliance calendar.
• File GSTR-1, GSTR-3B, and annual GSTR-9 before the due date.
• Set up automated reminders for filing deadlines.

4. Claiming Ineligible Input Tax Credit (ITC)

Mistake: Some businesses claim ITC on ineligible purchases, leading to rejection and penalties.

How to Avoid:

• Claim ITC only for business-related expenses.
• Ensure that suppliers file GSTR-1 so that ITC is reflected in GSTR-2B.
• Keep proper documentation of purchases.

5. Ignoring the Reverse Charge Mechanism (RCM)

Mistake: Businesses fail to pay GST under RCM for transactions with unregistered suppliers.

How to Avoid:

• Identify transactions subject to RCM.
• Pay GST under RCM and claim ITC appropriately.
• Maintained detailed records for RCM compliance.

6. Misreporting of Sales and Purchases

Mistake: Businesses underreport or overreport sales and purchases, leading to compliance issues.

How to Avoid:

• Cross-checked sales and purchase data before filing returns.
• Use GST reconciliation tools to verify data accuracy.
• Keep all invoices properly documented.

7. Non-Issuance of Proper Invoices

Mistake: Issuing incorrect or incomplete invoices leads to confusion and rejection of ITC claims.

How to Avoid:

• Issue GST-compliant invoices with mandatory details such as GSTIN, HSN/SAC codes, tax amounts, and invoice numbers.
• Use e-invoicing if applicable to your business.

8. Incorrect HSN/SAC Code Usage

Mistake: Using incorrect HSN (Harmonized System of Nomenclature) or SAC (Service Accounting Code) can result in classification errors and tax mismatches.

How to Avoid:

• Verify HSN/SAC codes before filing returns.
• Refer to GST tariff notifications for correct classification.
• Use GST software to automate classification.

9. Not Maintaining Proper GST Records

Mistake: Lack of proper documentation and record-keeping leads to compliance issues during audits.

How to Avoid:

• Maintain purchase registers, sales registers, and ITC claim records for at least 6 years.
• Store all invoices and receipts digitally for easy access.

10. Failing to Amend GST Details

Mistake: Businesses fail to update GST registration details like address, business structure, or authorized signatory changes.

How to Avoid:

• Regularly review business details in the GST portal.
• Apply for amendments in GST registration promptly.

Need Expert Help? Avoid GST Mistakes—Reach Out to AKPR Today!

Avoiding these common GST mistakes can save your business from legal troubles and unnecessary penalties. Staying informed, using reliable GST filing software, and regularly reviewing your tax compliance will ensure seamless GST management. If you’re unsure about any aspect of GST, consulting a Chartered Accountant (CA) or GST expert can help in navigating complex regulations smoothly.

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