5 Points to keep in mind before filing GST returns
GST or Goods and Service Tax, has been the talk of the town since it was implemented. The well-known method of paying tax among different developed countries came officially into effect on 1st July 2017 onwards in India. The welcoming notion and equal-hand criticism it received was a sure-shot sign that it made a difference in the working mechanism of the Indian economy.
Compliance with the GST provisions is a must-do task by every citizen as a registered taxpayer. In the lack of doing so, one will end up paying the penalty and late fees. There are multiple details that come in handy to avoid the last-minute rush for filing annual returns. With such a vast topic to dwell on, the basics of GST are still confusing to many. Here is an all-point checklist for taxpayers to consider before filing their next GST Returns:
1) Enlist all tax invoices and reconciliation thereof:
You should have a compiled copy ready of all the tax invoices issued during a financial year. It is advisable that you segregate the tax invoices GSTIN-wise and ensure that the sum of the value of all the tax invoices equals the turnover in the audited financial statements. It is possible that you could have revised some invoices of the previous year in the later months of the coming year. Those invoices have to be suitably assessed and then recorded in the annual return. Any dissimilarity in the invoices provided might lead to non-reporting or incorrect reporting that will not sit well with GST authorities.
2) Maintain proper records:
This is an essential requirement for a GST audit. Regardless of the profession you are involved in, and even if you are not eligible for a GST audit, you should have a healthy practice of maintaining proper documentation that may come under GST. This could mean anything from purchase and sale registers, fixed asset registers, payment challans, e-way bills, and others. In the event of a notice of inspection, or even at the time of closure of books of accounts, the reconciliation process will be much smoother if adequate and timely records are maintained.
3) Rectify any errors and include the missed invoices
Before filing the GST for the financial year, you must rectify the errors from your end and report the lost invoices and credit or debit notes if issued. The revision of information is rather difficult once GST is filed. To ensure that the closing statement for the year matches with the records documented for the year, you can rely on the data, and in case of any difference, you can scan for any errors.
4) GST Audit:
If your turnover has exceeded Rs 2 crores in the financial year, you are subjected to undertake a GST audit. If you have not already initiated the GST audit, then you should get it done straight off, as in such cases, the annual returns are to be attached with a certified reconciliation statement. The GST audit covers an entire range of transactions that happens during the year and therefore is crucial for the identification of inconsistencies and seizing timely corrective actions to reduce anticipated suit, wherever possible.
5) Claims of Input Tax Credit for the financial year:
You will not be able to claim any unclaimed ITC (Input Tax Credit) on invoices that happened in the financial year after the due date of return. So, you should compile the records that exhibit invoices on which ITC can be claimed.
Collecting all the data required for filing GST annual returns in one place is a very time-
consuming task. You should start with the process of reconciliation and GST audit, if applicable,
at the earliest. You must be ready with the audited financial reports for each registration to avert
any outcomes of an inaccurate annual return. Hence, by keeping note of these points, you can
make sure of the filing of correct annual returns.