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Filing GST returns is mandatory for taxpayers. It’s a complex procedure, hence it is important to be cautious about every entry made onto the GSTN portal. Any mistake made in GST Returns cannot be rectified. Make sure that you are aware of the most common errors as discussed below and stay away from committing them:

  1. Paying Tax under Wrong GST Category:

Various businesses have encountered loss because they paid under wrong categories. While filing GST returns, make sure you are paying your tax under the right Tax Head. There are several heads under which tax is reported while filing GST returns. Some taxpayers make the mistake of entering the GST liability or input tax credit under the wrong GST head. Even at the time of making payment, the tax is sometimes paid under the wrong head, or interest is paid under the tax head and so on. One needs to be cautious when making tax payments as the GSTN does not allow inter-utilisation of taxes. This could lead to block of working capital due to unplanned cash flows.

However we can transfer balances in Cash ledger to the respective correct Head in cash ledger by Filing PMT-09.

  1. Treating Zero rated supplies as Nil rated /Exempted Supplies  and vice versa

Nil rated supplies are those supplies which are liable to 0% & Exempted supplies are the supply of goods and services that does not attract GST. Input tax credit on Inward Supplies pertaining Nil rated supplies & Exempted supplies cannot be claimed by Taxable person.

Zero-rated supply means any of the following supplies of goods or   services:

  • Export of goods or services or both;
  • Supply of goods or services or both to a Special Economic Zone developer.
  • Supply of goods or services or both to a Special Economic Zone unit.

However GST Input tax credit on Inward supplies pertaining to zero rated supplies can be claimed by Taxable person. Several Taxable Persons confuse zero-rated supply with nil-rated and Exempt Supplies, though they do not mean the same thing which results in Ineligibility/difficult to Take Refund of GST Input tax credit on Inward supplies pertaining to zero rated supplies.

  1. Availing GST  Input Tax Credit  not in Compliance with the Provisions of Act & Rules made there under

Availing GST Input Tax Credit :

  • As per GST Act GST Input Tax Credit should be availed as per the provisions u/s 16 of CGST Act 2017 & Rules made there under.
  • As per Rule 36(4) From 01.01.2022 the amount of GST Input Can be claimed is restricted to GST ITC available in GSTR-2B as on the date of Filing GSTR-3B Return.

Reversal of GST Input Tax Credit :

  • At the time of Filing GSTR-3B we need to Reverse Blocked & Ineligible GST Input Tax credit

in compliance of provisions of section 17 of Act.   

  • We need to reverse GST Input if payments not made to suppliers within 180 days from date of issuance of Invoice.
  • If we fail to reverse the ineligible ITC/claim wrong ITC, then during tax assessment by the department, we may end up paying huge amount of tax, interest and penalty.

4. Non Filing of Final Return after Cancellation of GST Registration:

As per GST laws, after Cancellation of your GST registration, you need to file final return within 3 months. In this Final return we need to reverse all the Credits of the stock which are held or we need to pay in output liability as sale of stock.

We need to Reverse the input on Capital goods based upon usage on monthly basis. The formula is T /60. Generally we need to reversal based upon usage left in 60 months of purchase. This is a common mistake where after cancellation of GSTIN, GSTR -10 is not filed and applicable GST ITC is not reversed/applicable GST output is not discharged.

GST Department may issue notices and levy huge amount of penalty/late filing fees for non filing of final return and levy interest for non payment of applicable GST.

  1. Not filing return for NIL return

It is important to be aware that you have to file GST Returns despite zero sales. If you fail to do so, you will be required to pay a penalty for late filing/not filing GSTR. If you have zero sales in a particular tax period, make sure you file Nil returns. This is one of the major confusions Taxpayers face.

There are some more errors which are Common mistakes :

  • Not Mentioning HSN wise summary in GSTR-1
  • Not updating Additional place of business.
  • Not mentioning exempted turnover in GST return
  • Not paying GST RCM or paying unwanted RCM
  • Non updation of Bank account to GST department within 45 days after registration.

Disclaimer: “Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation

Prepared By : Niraj Jain


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