Top 10 Things You Should Know About GST Filing in India
The Goods and Services Tax (GST) is a significant tax reform in India, simplifying the country’s complex tax structure by replacing multiple indirect taxes. GST filing can be confusing, especially for new businesses, but understanding the key aspects can help you stay compliant and avoid penalties. Here are the top 10 things you should know about GST filing, along with some practical examples.
1. What is GST?
GST is a single tax that replaced various indirect taxes such as VAT, Service Tax, and Excise Duty. It applies to the supply of goods and services and is levied at each stage of the supply chain.
Example: A manufacturer selling goods to a wholesaler and the wholesaler selling to a retailer will each charge GST at different stages, but the end consumer will only pay the final price including all taxes.
2. GST Registration is Mandatory for Certain Businesses
If your business’s turnover exceeds the threshold limit set by the government, GST registration is mandatory. The threshold limit is ₹40 lakhs for goods and ₹20 lakhs for services (varies for special categories of states).
Example: If you run a mobile phone retail business with an annual turnover of ₹45 lakhs, you must register for GST and file returns.
3. Types of GST Returns
There are several types of GST returns, and the one you file depends on your type of business and turnover. Some common forms include:
- GSTR-1: Outward supply (sales) return.
- GSTR-3B: Monthly summary return (for regular taxpayers).
- GSTR-9: Annual return.
Example: A service provider will file GSTR-3B monthly to report sales and tax paid, while a manufacturer will file GSTR-1 for sales and GSTR-3B for a summary.
4. GST Filing Frequency
GST returns are generally filed monthly, but there are cases where quarterly filings are allowed. Monthly returns are due by the 20th of the following month.
Example: If you have a business selling products online, your GSTR-3B for the month of January would be due by February 20th.
5. GST Payment is Based on Output vs. Input Tax
GST operates on a “credit-based” system, meaning you can set off the GST paid on inputs (purchases) against the GST collected on outputs (sales). This helps avoid cascading taxes.
Example: If you sell a product for ₹10,000 + ₹1,800 GST (18%), and you have already paid ₹900 GST on your purchase, you will pay ₹900 in tax after adjusting the input credit.
6. GST Returns for E-commerce Sellers
E-commerce sellers have additional compliance requirements under GST. They need to ensure that the platform collects and deposits GST on their behalf and file their returns accordingly.
Example: A seller on Amazon or Flipkart needs to comply with GST regulations, file GSTR-1 for sales, and GSTR-3B for tax summaries. The e-commerce platform will collect the GST and remit it to the government.
7. Importance of Accurate Invoicing
For GST filing, accurate invoicing is crucial. Your invoices must include details such as the GSTIN, tax rate, and the amount of GST charged. Incorrect or missing details could lead to penalties.
Example: If you miss mentioning the GSTIN on an invoice while selling goods worth ₹50,000, it can lead to discrepancies during GST filing and penalties.
8. GST Audit and Assessment
GST filing doesn’t end with the submission of returns. The government may audit your returns to verify the accuracy of your tax filings and payments. If discrepancies are found, you may be liable to pay penalties or interest.
Example: If your business claims an input tax credit on a purchase that doesn’t meet the GST criteria (e.g., a non-GST registered supplier), you might face a tax audit and penalties.
9. Penalty for Late Filing
Late filing of GST returns is subject to penalties. If you miss the due date, you may face a penalty of ₹50 per day for delayed filing (₹25 for CGST and ₹25 for SGST). Additionally, interest on unpaid tax is charged at 18% per annum.
Example: If you file your GSTR-3B late, say 10 days after the due date, the penalty would be ₹500 (₹50 x 10 days).
10. GST and Input Tax Credit (ITC)
One of the key benefits of GST is the Input Tax Credit (ITC), which allows businesses to claim credit for the tax paid on inputs (purchases). However, to claim ITC, you must meet certain conditions such as ensuring that the supplier has filed their returns.
Example: If you buy raw materials for ₹5,000 and pay ₹900 GST, you can claim that ₹900 as an input credit when you file your GST return.
Conclusion
Understanding GST filing is essential for ensuring compliance and maximizing your tax benefits. With these 10 points, you should have a clear overview of what GST is, how it works, and what your business needs to do to stay compliant.
Need help with GST filing? Contact Tax India Firm today for expert guidance and seamless tax compliance!