Essential GST Compliance Checklist for Your Business

Businesses
in India must comply with the Goods and Services Tax (GST), rolled out from 1st
July 2017 onwards. For every economic activity, GST is expected to impact the
prices of commodities, investments, and business operations. Businesses that do
not comply with GST are bound to pay heavy penalties.
This article will provide you with a complete GST compliance checklist that your business must abide by to ensure you avoid penalties and fines.
Table of Content:
- What
is the GST Compliance?
- Who
is liable to register for GST?
- What
are the benefits of GST?
- How
to fill the GST returns?
- What
are the compliances for GST?
- What
records must be maintained under GST?
- What
are the common errors committed by many?
- Is
GST applicable on fines and penalties?
- How
do you avoid the GST penalty?
- How WeP digital GST Compliance software helps you to file GST returns on time?
A
Comprehensive GST Compliance Checklist
1.
What is GST compliance?
The
GST Council of India has imposed some rules on the way businesses maintain
records, raise invoices, report purchases and sales, pay taxes, and file
returns. GST compliance is all about adhering to and complying with the GST
rules and regulations.
With
the GST reform getting effective in India, businesses that are still not wholly
GST compliant require careful compliance management. This article will help
business organisations with knowledge on how to avail the opportunities offered
by the new tax system.
2.
Who is liable to register for
the GST?
Business
entities such as individuals, Hindu undivided families (HUF), corporations or
government companies, LLPs formed under a foreign country’s law, cooperative
society, local authorities and trusts engaged in trade and commerce are taxable
under the GST Act. The list of entities liable for GST registration is given
below:
â—Ź Goods suppliers between states
A
business that supplies goods or services between states and comes under
inter-state supply.
â—Ź Taxpayer
A
business owner who supplies goods and services occasionally.
â—Ź Non-resident taxable person
A
person who supplies goods or services in India without having any fixed
business place or residence.
â—Ź Input service distributor
A
goods or services supplier receives tax invoices for input services and issues
a document for distributing the taxes imposed by the Union, state, integrated,
or Union territory government on the services to a goods or services supplier.
3.
What are the benefits of the
GST?
GST
is levied on the supply of goods and services from the manufacturer to the
consumer. The benefits of GST are:
1. Easier compliance:
The
taxpayer services such as returns, payments, and registrations, are available
to the online taxpayers making easy compliance.
2. Minimum tax cascading:
A
seamless credit of tax in the value chain ensures minimum tax cascading that
reduces hidden business costs.
3. Reduced goods and services cost
The
entailing of major GST Central and State taxes, comprehensive input goods and
services, and Central Sales Tax (CST) reduce the cost of goods and services,
boosting Indian exports and reducing compliance costs.
4. Revenue efficiency
GST
will result in higher revenue efficiency by increasing tax compliance and,
thereby, boosting the government’s collection.
4.
How to fill the GST returns?
There
are two ways to fill the GST returns, online and offline
i. Online filing
One
can file the GST returns online via the GST portal https://gst.gov.in with the
help of their PAN number, monthly returns and verifying the inward and outward
supplies.
ii. Offline filing
One
can file the GST returns offline by visiting and downloading the offline tool.
After that, one can fill in the GSTR-1 and GSTR-2 forms easily.
- What are the Common GST Compliances?
GST law
offers compliances to be done every month, quarter and half-year. Here are
those GST compliances that need to be carried out:
1. It is compulsory to do
e-invoicing of your GST if your aggregate turnover is more than 50 Crores.
- An
input tax credit reversal is needed for the credit of taxable and exempted
supplies.
- Every
GST registered person making zero-rated supplies needs to obtain or renew
his Letter of Undertaking at the end of every financial year.
- A GST registered person with aggregate
turnover exceeding Rs. 5 Crores must mention a 6-digit HSN code on the
supply of goods or services on tax invoices.
- Any returns and reconciliation filed
after the due date of annual returns are liable for a late fee of Rs.200
for every day, subject to a maximum of 0.5% turnover.
6.
What records must be maintained
under GST?
When
GSTIN is applied, certain documents are to be submitted to the authorities,
including a business’s address. The taxpayers must maintain the following
records:
• The manufacture or goods production
details.
• The inward and outward services or
goods supply.
• Input tax credit.
• Output payable tax.
7.
What are the common errors
committed by many?
Common
errors mentioned below, while filing GST returns, can result in losses and
closure of the business:
i. Wrong GST or invoice number
The
GST portal has a matching mechanism where the data entered in GSTR 1 gets
auto-populated in GSTR 2A. Quoting the wrong invoice or GSTIN will create a
problem in filing the details.
ii. Data reconciliation
One
must reconcile the GST returns data correctly. Taxpayers fill the GST returns
data without a proper reconciliation resulting in a mismatch from the
financials resulting in GST registration cancellation.
iii. Input tax credit reversal
The
supply recipient must pay tax under the reverse charge mechanism. The supplier
has to pay the tax, which is not refundable.
iv. Late return filing
Many
taxpayers do not file the returns within the due date leading to a late fee,
penalty and notice from GST authorities.
8.
Is GST Applicable on Fine and
Penalty?
GST is applicable for fines and penalties under Section 122
to 138 of the GST Act under the following circumstances.
Late Fee for
GST return:
â—Ź A person who
does not furnish the outward or inward supplies details, monthly or final
return by the due date is liable to pay INR 100 for every day up to a maximum
of INR 5,000.
â—Ź A person who
does not furnish the annual return by the due date is liable to pay INR 100
every day up to a maximum of the person’s quarter percent turnover.
Interest for
Late Payment of GST:
â—Ź A person who
fails to pay the tax is liable for an interest payment of 18% from the first
day from which the tax due is calculated.
â—Ź A person who
makes an excess input tax credit claim is liable for an interest payment of
24%.
â—Ź A service
recipient who does not pay the service amount within 180 days from the invoice
date is liable for an interest payment of 18%
9. How do you avoid GST Penalty?
When
a GST-registered business does not file its GST return before the due date,
then it is liable to pay a late fee under Section 47 (2) GST Act, 2017. Below
are the ways to avoid GST penalty:
i. File all the pending returns
immediately
ii. Businesses registered under GST but
have failed to file returns since the registration date must apply for
registration cancellation if there are no sales or purchases.
iii. Keep checking the tax filing status if a
third party handles it.
10. How WeP Digital GST Compliance Software helps you to file GST
returns on time?
The
WeP Digital GST platform for filing returns is one of India's best GST returns
filing software. It offers to match 6,000 invoices at a moment where you can
claim the input tax credit, get data security, and it is compatible with any
ERP software. It offers experienced technical support, 99.99% uptime, and the
module for invoice generation and customer data management in one place.
Get
to know more about our WeP GST solution by filling out the form on our website.
Conclusion
GST is a major law, and understanding it in detail can be overwhelming for an ordinary man. Using the best GST Software for return filing can help you avoid penalties and pay GST returns on time.
In
this article, we have tried to cover everything about GST compliance, the
checklist to be followed while filing GST and the ways to avoid late penalties
and fees while filing GST returns. WeP is the perfect software for filing your
GST returns seamlessly. Using this software, you can easily file the GST
returns without any hassle and do your billing on time.