Common GST Mistakes to Avoid for Businesses in Chandigarh

 

The introduction of Goods and Services Tax (GST) in 2017 represented one of the biggest tax reforms in India. However, due to its complex structure, many businesses in Chandigarh struggle to ensure full compliance and avoid penalties. Here are some common GST mistakes that businesses in Chandigarh must steer clear of:

Incorrect Registration Type

One error many make is choosing the wrong GST registration consultant type. The major ones are regular registration, composition scheme, TDS/TCS registration. Opting for composition when you are not eligible can lead to recovery of tax with penalties. Seek expert advice to determine the ideal GST registration type for your business operations and turnover.

Missing GST Deadlines

Another big mistake is missing GST due dates for filing returns, monthly tax payments, annual filing, etc. Delayed filing of GST returns like GSTR-1 and GSTR-3B even by a day attracts late fees up to Rs 200 per day. Further, input tax credit gets lapsed if returns are not filed on time. Mark your calendars with all important GST due dates for strict compliance.

Incorrect Invoice Information

About GST invoices issued by suppliers must contain specific details like GSTIN, place of supply, HSN codes, itemized tax rates etc. Any errors or missing information can lead to issues in the invoice uploading process or input tax credit claims getting rejected. Ensure suppliers share invoices with all details specified under GST invoice rules.

Wrong HSN Codes 

Using incorrect HSN codes for goods and services in invoices results in payment of wrong GST rates and mismatch with suppliers’ filings. Double check HSN codes using GST rate finder tools before printing invoices. Update your accounting system with latest codes to avoid this error.

Incorrect ITC Claims

Another slip is taking more input tax credit than eligible or carrying forward inactive ITC due to missing return deadlines. Improper ITC claims get flagged during GST audits and must be paid back with interest. Be diligent in claiming input credit only on eligible purchases and within permitted time limits.

GST Payment Mismatch

If there is a mismatch between your outward tax liability and actual GST paid as per government records, it leads to loss of credit and adverse audit attention. Reconcile liability amounts, use GST challans correctly, and follow up with banks to ensure error-free payment and matching.

Non-Compliant E-Way Bills

While transporting goods worth over Rs. 50,000 within or across state borders, valid e-way bills have to be generated. Non-compliant e-way bills lead to hefty penalties. Ensure suppliers use e-way bills for product shipments and adhere to all procedural requirements.

Record-Keeping Gaps

Maintaining accurate and sufficient records related to GST transactions is mandatory. But gaps in accounts, disorganized documents can obstruct tax audits and cause legal issues. Follow standard record maintenance procedures and document management practices.

GST Compliance is complex, but being aware of common errors can help Chandigarh businesses avoid them and the related consequences. Implement regular GST audits, staff training, software checks to identify and plug gaps proactively. With some diligence and care, your business can steer clear of attracting GST penalties and problems with authorities. Stay up to date on GST provisions and seek expert help whenever needed.