GST Tax Compliances

GST (Goods and Services Tax) is a comprehensive indirect tax levied on the supply of goods and services in India. It replaced a complex web of previous indirect taxes like excise duty, service tax, VAT, and others. GST is governed by the Goods and Services Tax Act, which came into effect on July 1, 2017. Complying with GST regulations is essential for businesses to avoid legal issues and ensure smooth operations.

Typically involved in GST Tax Compliances?

It provides the foundation for accurate financial reporting, tax compliance, and informed decision-making.

GST Registration

Mandatory Threshold - Businesses with an annual turnover above the specified threshold limit (₹40 lakh for most businesses; ₹20 lakh for special category states) must register for GST. The threshold may vary for certain categories of businesses.

Voluntary Registration - Businesses with a turnover below the threshold can also choose to register voluntarily to avail of the benefits and credibility that come with being a registered GST taxpayer.

GST Returns and Filing

Periodic Returns - Registered businesses need to file GST returns on a regular basis, usually monthly or quarterly, depending on their turnover and the type of business.

Details and Transactions - GST returns require the reporting of various details, including outward supplies (sales), inward supplies (purchases), input tax credit availed, and tax liability.

GSTR Forms - Different types of returns are filed using various GSTR forms, such as GSTR-1 for outward supplies, GSTR-2 for inward supplies, GSTR-3B for summary return and payment, etc.

Input Tax Credit (ITC) Reconciliation

Matching Invoices - Businesses need to reconcile their purchase invoices with the supplier's invoices to claim input tax credit accurately.

GSTR-2A - GSTR-2A is an auto-populated form that reflects the purchases made by the taxpayer as per the supplier's filings. Taxpayers need to reconcile this data with their own records.

GST Payment

Electronic Cash Ledger - Tax payers deposit GST liability in the electronic cash ledger and utilize it to make payments for GST liabilities.

Utilization Rules - Businesses can utilize the available balance in the electronic cash ledger to offset their tax liability for various tax heads, such as CGST, SGST, IGST, and cess.

E-Way Bill Compliance

Interstate Movement - For the movement of goods worth over a specified value (varying by state) between states, an e-way bill needs to be generated electronically.

Validity - The e-way bill is valid for a certain number of days based on the distance and mode of transportation.

GST Audits and Assessments

Annual Audit - Businesses with a turnover above a certain threshold (₹2 crore as of my last update) are required to undergo an annual GST audit by a chartered accountant or cost accountant.

Assessment - Tax authorities may conduct assessments to ensure proper compliance. It's important to maintain accurate records for this purpose.

Penalties

Non-compliance with GST regulations can result in penalties, interest, and legal actions. It's crucial for businesses to adhere to GST requirements to avoid such consequences.

Consequences

The above points provide a general overview of GST tax compliances as of my last update in September 2021. Since GST regulations can evolve, it's recommended to refer to the official GST portal and other authoritative sources for the most current and accurate information.

Some common documents required for GST tax compliance

Registration Documents
  • PAN Card - Permanent Account Number of the business/entity.
  • Proof of Constitution - Partnership Deed, Certificate of Incorporation, Memorandum of Association, etc..
  • Address Proof - Utility bills, lease agreement, rent agreement, etc.
  • Bank Account Details - Bank statement or canceled cheque.
Tax Invoice Documents
  • Tax Invoices - Invoices issued to customers for the supply of goods or services.
  • Bill of Supply - Used when GST is not applicable, like for exempted supplies.
Purchase and Sales Records
  • Purchase Invoices - Invoices received from suppliers for purchased goods.
  • Sales Records - Records of all sales transactions, including details of products, quantities, and values.
Input Tax Credit (ITC) Records
  • ITC Reconciliation - Reconciliation of ITC as per GST returns with actual ITC availed and utilized.
Returns and Statements
  • GSTR-1 - Monthly/Quarterly statement of outward supplies (sales).
  • GSTR-3B - Monthly summary return for self-assessment of tax liability.
  • GSTR-2A and GSTR-2B - Auto-populated returns showing input tax credit details.
  • Annual Return (GSTR-9) - Yearly return reconciling all supplies and ITC.
  • Reconciliation Statement (GSTR-9C) - Reconciliation between the financial statements and the annual return.
E-Way Bills
  • Documents required for the movement of goods with a certain value between states.

Job Work Records
  • Job Work Challans - For sending goods to job workers and receiving them back.
Export and Import Documents
  • Shipping Bill/Bill of Export - Required for export of goods.
  • Importer Exporter Code (IEC) - Required for import and export of goods.
Other Supporting Documents
  • Documents - Any documents requested by tax authorities for verification or audit purposes.
Payment and Challans
  • Challans - Proof of payment for GST liabilities.
  • Bank Statements - To track transactions related to GST payments and refunds.
Tax Deducted at Source (TDS) Documents
  • TDS Certificates - For TDS deducted and deposited on supplies.