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10 Common Mistakes When Filing GST Returns to Avoid

Filing GST returns can be a complex process, and making mistakes can lead to heavy penalties and late payment fees. To help you navigate this process successfully, we've compiled a list of the 10 most common mistakes that taxpayers and tax practitioners make when filing GST returns. By avoiding these mistakes, you can ensure that your returns are accurate and compliant with GST regulations.

1. Incorrect ITC claim and reversal

The erroneous claim of an Input Tax Credit (ITC) is one of the most frequent errors taxpayers make when submitting GST forms. ITC is the amount by which a company can lower its tax obligation when it makes sales. As booking and claiming ITC are subject to certain laws and requirements, it is essential to disclose the exact value of ITC when submitting GST returns. If an inaccurate ITC value is claimed or blocked GST credits are claimed, the taxpayer must make up the difference in the return for the next month and pay any applicable interest.

To avoid this mistake, taxpayers should familiarize themselves with the rules and conditions for claiming ITC and ensure that they report the correct value in their GST returns. It is also advisable to use GST interest calculators to determine the interest payable in case of any discrepancies.

2. Non-Payment of GST under RCM

The Reverse Charge Mechanism (RCM) transfers the tax liability from the seller to the buyer, making the purchaser responsible for tax payment. RCM is applicable to certain types of businesses and specific supplies under GST. One common mistake is the non-payment of GST under RCM, especially for supplies provided by goods transport agencies. To avoid paying taxes twice, the supplier does not need to pay GST on these supplies.

To prevent this mistake, taxpayers should be aware of the supplies that fall under RCM and ensure that they comply with the tax payment obligations. Staying updated with the list of supplies under RCM is crucial to avoid any penalties or late fees.

3. Omitting Exempted Turnover in GST Returns

Zero-rate supplies, also known as exempted turnover, do not have any effect on the GST liability of the taxpayer. However, it is essential to report these supplies while filing GST returns. Failure to disclose exempted or nil-rated sales in GSTR 3B and GSTR 1 can be considered concealment of facts and may result in penalties.

To avoid this mistake, businesses registered under GST must report all exempted or nil-rated sales accurately in their GST returns. This ensures transparency and compliance with the regulations.

4. Paying taxes under the incorrect GST category

GST has different categories under which the tax amount must be deposited. Taxpayers often make the mistake of submitting their GST liabilities or ITC under the wrong category. This can lead to cash flow issues and calculation errors.

To prevent this mistake, taxpayers should carefully review the different GST categories and ensure that they deposit their tax liabilities and ITC under the correct headings. It is crucial to understand the classification of different transactions and their respective tax rates to avoid any errors in filing GST returns.

5. using the Composition Scheme's benefits despite not being qualified

Small taxpayers benefit from relief from the filing process thanks to the GST Composition Scheme, which streamlines the procedure. However, only taxpayers with a turnover of under Rs. 1.5 crore are eligible for this program. Utilizing the Composition Scheme's benefits without being eligible could result in unforeseen GST liabilities.

To avoid this mistake, taxpayers should assess their eligibility for the Composition Scheme before opting for it. It is essential to accurately calculate the turnover and ensure compliance with the eligibility criteria to avoid any penalties or additional tax liabilities.

6. Non-Filing of GSTR-10

A registered firm must submit GSTR-10, the final return, when it wishes to give up its GST number. Final cancellation orders with details on the tax payable and late charge may be issued if GSTR-10 is not filed by the deadline.

To avoid this mistake, businesses should ensure that they file GSTR-10 within the given time frame if they decide to cancel their GST registration. It is crucial to adhere to the filing requirements to avoid any legal consequences.

7. Not making GSTR-3B and GSTR-1 reconciliation

To ensure accuracy in return filing, taxpayers must reconcile GSTR-3B with GSTR-1 on a monthly basis. Failure to reconcile these forms can result in lost revenue, notices from tax authorities, and other complications.

To prevent this mistake, taxpayers should diligently compare and reconcile the data in GSTR-3B and GSTR-1. It is important to identify any discrepancies and rectify them before filing the GST returns. Regular reconciliation can help maintain accuracy and avoid penalties.

8. Taxpayers fail to claim TDS and TCS Credit

As per GST provisions, taxpayers are entitled to claim Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) credit. However, taxpayers often forget to claim these credits, resulting in missed opportunities to offset their tax liabilities.

To avoid this mistake, taxpayers should ensure that they claim TDS and TCS credits in their GST returns. It is important to keep track of the deductions and collections made by TDS deductors and TCS collectors respectively to utilize these credits effectively.

9. Categorizing zero-rated supplies as Nil-rated

Taxpayers frequently confuse zero-rated supplies with nil-rated supplies when filing GST returns. Zero-rated supplies refer to exports made to Special Economic Zones (SEZ) by GST-registered taxpayers, while nil-rated supplies have a zero tax rate and include both goods and services.

To avoid this mistake, taxpayers must correctly differentiate between zero-rated and nil-rated supplies when filing their GST returns. Accurate classification of supplies ensures compliance with GST regulations and prevents any penalties or additional tax liabilities.

10. Errors while uploading data invoice-wise in GSTR-1

Taxpayers are required to provide detailed information about each invoice's outward supplies in GSTR-1. Errors in data entry can lead to discrepancies between GSTR-1 and GSTR-3B, resulting in tax penalties.

To prevent this mistake, taxpayers should be meticulous when entering data in GSTR-1. It is important to double-check the information provided, including invoice numbers, locations, tax rates, and other relevant details. Attention to detail can help avoid reconciliation errors and ensure accurate filing of GST returns.

In conclusion, by being aware of these 10 common mistakes and taking the necessary precautions, taxpayers can ensure the accurate and timely filing of their GST returns. Avoiding these mistakes will not only help businesses maintain compliance with GST regulations but also prevent penalties and late payment fees. Stay informed, stay vigilant, and maximize the benefits of the GST system.



The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

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