As GST continues to play a vital role in the taxation landscape, it’s crucial for businesses and individuals alike to stay informed and compliant. In this guide, we will delve into the intricacies of GST compliance and all its facets in detail. Whether you’re a business owner, tax professional, or a curious individual, this guide is designed to demystify GST compliance and equip you with the knowledge and tools necessary to meet your obligations efficiently and effectively.
Nevertheless, if you are someone who is seeing rapid growth in your business and are wondering how it’s going to affect your taxation, this article is a must read!
1. GST Compliance
After your GST Registration, the first and foremost requirement is that you get well-versed with GST Compliance. The applicability of GST registration is dependent on your Aggregate Annual Turnover (AATO) and there are several forms (or returns) that need to be filed at varying frequency to reveal your sales and purchase data to the Government. Following are the points to be taken care of:
1. Turnover: Whether or not to opt for GST Registration, and which GST returns to be filed are determined based on the AATO.
b. Turnover 40 Lacs – 1.5 Cr: Option to register as Composite Taxpayer, Get GSTIN and file just a single return CMP 08. At the same time, enjoy the perks of paying tax at a lower rate.
c. Turnover >Rs. 1.5 Cr: Registered Taxpayer, need to file monthly GST Returns to report sales data and pay tax liabilities.
i. For turnover up to Rs. 5 Cr, you may opt to file QRMP (Quarterly Returns with Monthly Payments). Under the QRMP scheme registered persons is allowed to furnish their GST returns on a quarterly basis along with monthly payment of tax, with effect from January 01, 2021.
2. Turnover: For businesses registered as regular taxpayers, returns are to be filed on either monthly or quarterly basis (if opted for QRMP)
a. GSTR-1: A GST return to provide details of all their outward supplies/sales records.
b. GSTR-3B: A return, consists of summarized details of supplies made during the month along with the details of paid taxes, ITC claimed, purchases under reverse charge mechanism, etc.
c. Invoice Furnishing Facility (IFF) – An additional but optional return for businesses who have opted for QRMP. IFF to be filed monthly to include B2B sales invoices which can help the customer to claim ITC monthly, instead of waiting for quarterly GSTR 1.
Apart from these recurrent forms, there are several other forms that need to be filed on cases to case basis depending on the transactions to be reported such as 2X to claim TDS and TCS credit, GSTR 5 for non-residents, GSTR 5A for OIDAR service providers, 6 for ISD, 7 for TDS, 8 for TCS and GSTR-10 in case of GSTIN cancellation
Refer GST Forms and Functionalities available on the GST Portal for further details.
2. Purchase /ITC Reconciliation
GST Reconciliation is a crucial step that you, as a taxpayer, need to undertake to avail ITC. For every month’s GST filing, you need to reconcile your purchase data with all your suppliers’ sales data that they have uploaded on GSTN. Upon reconciliation, if the data on both ends match, claiming ITC can be very easy. However, as your business grows, there can be several mismatches and that can put you on a difficult road, exploring through huge piles of invoices for one simple error.
Since the beginning, the government has been providing an auto-drafted dynamic purchase statement in the form of GSTR-2A. However, recently, the government introduced GSTR 2B to simplify the process of reconciliation and Input Tax Credit claims. GSTR 2B is still an auto-drafted purchase statement but unlike 2A, it is static. GSTR 2B gets populated every month only for those invoices which are submitted before the 14th of the month.
As the company grows, it is important to have enough cash flow in the business. Maximizing your ITC claim can help you have that extra cash flow and the freedom to re-invest it into your business.
The goal of achieving maximum and accurate ITC is challenging, yet manageable by using the right strategies and solutions. Taxpayers should carefully weigh the pros and cons and go ahead with a solution or rather a GST Compliance partner who can help them to meet the objective, effectively and efficiently. Availability of ITC has a direct impact on cash outflow for the taxpayer. Hence, more the ITC available the better. Well defined internal processes and solutions to help you reconcile purchase data can assist you in narrowing down the discrepancies and help you to maximize your ITC claim.
Vendor’s GST Compliance Impacts Your ITC
All the above-mentioned returns are related to your personal GST compliance however, it is also important to keep a tab on your vendor compliance as it directly impacts your Input Tax Credit. We understand that as a small business owner, it is difficult for you to deal with all the vendors and check if they have filed their GST returns on time. This is when IRIS Peridot 5.0 can help!
With IRIS Peridot 5.0, we provide a high-level view of your ITC as per GSTR 2A and how it reconciles with your GSTR 2B. You can drill down to know the vendors who are yet to file their returns affecting your ITC and which are the invoices where ITC is not eligible and so on.
3. Annual Return and Self-Certification
Annual GST Return (GSTR 9) has to be filed by every taxpayer (except few specified categories of persons). After filing monthly/quarterly returns for an entire year, annual return offers to give summarized details of outward supply and taxes paid thereon, input tax credits claimed, taxes paid, and refund claimed in the financial year. This can be another challenge for business owners as reconciliation can again be tedious citing innumerable transactions and invoices.
GSTR 9C: GSTR 9C is an annual audit form for all the taxpayers having a turnover above 2 crores in a particular financial year.
GSTR 9 Self-Certification: As per GST Notification 29/2021, GSTR 9C can now be furnished through self-certification instead of audit report from CA or Cost Accountants w.e.f 1st August 2021. This change will apply for Annual Return for FY 2020-21.
GSTR-4 is an annual GST return to be filed by the taxpayers who have opted for the composition scheme under GST.
4. E-invoice Applicability | GST Compliance
The e-invoice mandate went live on October 1, 2020 for businesses with Rs. 500 Crore turnover and later, the mandate got extended for businesses with a turnover of Rs. 100 Crore annually. Now, the current e-invoicing mandate has opened up for companies with Rs. 5 Crore turnover from August 1, 2023; and it is said to be soon extending for smaller taxpayers as there are multiple advantages of e-invoicing for small businesses. Even if you have received an e-invoice or are anticipating coming under the threshold, understanding the basics can take you a long way.
E-invoicing is an electronic authentication mechanism under GST. Under the mechanism, all the B2B transactions and Export invoices generated by a business need to be registered with the Government system i.e. the Invoice Registration Portal (IRP) and businesses need to obtain a unique identification number for every invoice called Invoice Reference Number (IRN). Along with IRN, the IRP will also create a digitally signed QR code with select details from the invoice and digitally sign the uploaded invoice data. Thus, an e-invoice is a document that has an IRN associated with it and the digitally signed QR code printed on it. You can read all about e-invoicing in detail here: E-invoice under GST
5. E-way Bill Applicability | GST Compliance
If your business requires the movement of goods, you must be aware of the need to generate an E-way Bill. An E-way Bill needs to be generated when there is a movement of goods of consignment value more than Rs. 50,000. One of the main reasons for generating an E-way Bill for inter-state and intra-state transportation of Goods is to eliminate the chances of tax evasion. The E-way bill lowers the chances of bribery and corruption and ensures a smooth and efficient transition of goods across the nation.
Click here to know more about E-way Bill Under GST
The Government has streamlined the generation of the E-way Bill with E-Invoicing. IRP can be used to generate not only IRN but also E-way bills, for the documents which qualify. Thus, depending on the data sent, the IRP system will return IRN or E-way Bill Number or both.
Lastly, A Few More Reconciliations
Auto-population of details from e-invoices into GSTR-1 is only a facility for the taxpayers and not final numbers from a legal point of view. After viewing the auto-populated data, the taxpayers need to verify the propriety and accuracy of the amounts and other data in each field, especially from the perspective of GSTR-1 and file the same, in the light of relevant legal provisions.
E-invoice details are being auto-populated by GSTN but still, it becomes very important to reconcile it with your final GSTR 1 data as per books. It will help you ensure that all invoices which you want to report in GSTR 1 which should have IRN indeed have got proper IRN or not and the data auto-populated by GSTN is also proper or not. It will be a double check on your own data sent for IRN generation vs. what you are finally filing in GSTR 1 with GSTN. Read more about Auto-population of e-invoice details into GSTR 1.
These were all the GST compliances that a registered person has to take care of. For a small business, taxation becomes an additional task that requires a lot of time and attention. Managing your business with day-to-day activities and dealing with timely compliances to avoid penalties is hard and thus an integrated solution for GST compliance becomes a must! Read on to know about what IRIS GST has to offer…
IRIS GST’s Integrated Solution:
IRIS GST’s Integrated Solution is a cloud-based software that brings all the tasks on a single platform. It is trusted by hundreds of companies across the country for their GST Filing, E-invoicing and E-way Bill management. This integrated solution is made available on a unified platform with a single log-in for ease of use i.e. get all our offerings – IRIS GST Software, IRIS Topaz and, IRIS E-invoicing from a single log-in and shared business hierarchy. Our Integrated Solution with all in one ‘GST Suite’ will not just streamline the GST Filing, E-way Bill Management and E-invoice processes but also will reduce the time involved with 100% accuracy!
The integrated solution includes:
IRIS GST Software, our GST Solution can help you reconcile your purchase data with government records, with no-hassles guaranteed. It swiftly scans through your purchase and the suppliers’ sales data and points out the discrepancies. Furthermore, its smart assistance can help you to rectify the discrepancies (if any), on the go. It indeed is a GST Solution of top organizations across the country.
IRIS E-invoicing – is a complete e-invoicing software solution that can help you make your e-invoicing journey a smooth ride. It is a cloud-based advanced e-invoicing solution that can integrate with your billing systems in multiple ways and help you generate IRN seamlessly without disrupting your current business processes.
IRIS is also a government authorized Invoice Registration Portal (IRP).
IRIS Topaz, our smart E-way Bill management solution caters to the needs of suppliers, and consignors alike. It enables the users to replicate the company’s business hierarchy and E-way bill assignment roles to mimic sales and dispatch processes. You can easily generate bulk E-way Bill, Mass Update/Modify and/or Cancel when required, Extend Validity of E-Way bill on the go and create consolidated E-way Bill as well as multi-vehicle E-way Bills.
Let us aid you in your GST compliance journey. Reach out to us at email@example.com and we would be happy to help.