Module 7: Common Mistakes to Avoid in GST Compliance
1. Delayed GST Return Filing
Mistake: Businesses often delay filing GSTR-1, GSTR-3B, or other applicable returns. This leads to late fees, interest, and blocked Input Tax Credit (ITC) for recipients.
Avoidance Tip:
- Set calendar reminders for return due dates.
- Use automation tools or compliance partners to avoid delays.
2. Incorrect Classification of Goods and Services
Mistake: Using the wrong HSN (for goods) or SAC (for services) can lead to incorrect tax rates being applied and potential disputes.
Avoidance Tip:
- Refer to the official GST HSN/SAC directory.
- Keep your billing software updated with the latest GST rate notifications.
3. Claiming Ineligible Input Tax Credit (ITC)
Mistake: Claiming ITC on ineligible items like personal expenses, blocked credits under Section 17(5), or missing invoices.
Avoidance Tip:
- Reconcile purchases with GSTR-2B monthly.
- Only claim ITC on eligible business expenses backed by valid invoices.
4. Not Reconciling GSTR-2B with Books
Mistake: Many businesses skip monthly ITC reconciliation, resulting in excess or ineligible claims, triggering notices from the GST department.
Avoidance Tip:
- Match books of accounts with GSTR-2B regularly.
- Use reconciliation tools for accuracy.
5. Ignoring Amendments in Law
Mistake: Failing to stay updated with new GST rules, such as changes in return formats, invoicing rules, or e-invoicing thresholds.
Avoidance Tip:
- Subscribe to GST council updates or consult professionals regularly.
- Train your accounting team quarterly on latest compliance updates.
6. Wrong Use of Reverse Charge Mechanism (RCM)
Mistake: Not applying RCM when required (like on legal services, imports, GTA services), or claiming ITC without actual payment.
Avoidance Tip:
- Maintain a checklist of RCM categories applicable to your business.
- Pay RCM liabilities in cash and claim ITC accordingly.
7. Not Maintaining Proper Documentation
Mistake: Missing or improper documentation like invoices, delivery challans, credit/debit notes, e-way bills, etc.
Avoidance Tip:
- Keep all records digitally organized and easily retrievable for audits.
- Store data safely for a minimum of 6 years as required under GST law.
8. Errors in E-Invoicing or E-Way Bill
Mistake: Failure to generate e-invoice where applicable or mismatched e-way bill details (like vehicle number, invoice mismatch).
Avoidance Tip:
- Integrate ERP or billing software with the Invoice Registration Portal (IRP).
- Cross-check Part A and B before finalizing the e-way bill.
9. Ignoring GST Notices
Mistake: Many businesses ignore or delay responses to notices issued under GST, which may result in penalties or cancellation of registration.
Avoidance Tip:
- Check GST portal dashboard weekly.
- Assign a compliance officer or professional to track and reply to notices promptly.
10. Not Filing Nil Returns
Mistake: Believing that if no transaction occurred in a month, return filing isn’t required.
Avoidance Tip:
- File NIL returns for every applicable period, even if there are no transactions.
Consequences of Non-Compliance
| Error Type | Possible Consequences |
|---|---|
| Late return filing | ₹50/day per return + Interest on tax due |
| ITC misclaim | ITC denial, demand notice, 100% penalty |
| No e-invoice/e-way bill | ₹10,000 per invoice or tax amount |
| Ignoring notices | Penalties, audits, cancellation of GSTIN |
Conclusion
Avoiding common GST compliance mistakes can save your business from unnecessary legal hassles, financial loss, and disruption in operations. Consistent recordkeeping, professional support, and timely reconciliation are key pillars to staying compliant in 2025.
💼 Need Expert GST Compliance Support?
At Verotus Finlegal Solutions LLP, we help businesses avoid these errors by managing end-to-end GST compliance with accuracy and accountability.
📞 Call Us: +91-7066336680
🌐 Visit: www.verotusllp.com
