GST GST

GST Compliance: Checklist, Rating & Filing Guide

Learn about GST compliance in India, including registration, tax filing (GSTR-1, GSTR-3B), ITC claims, and penalties for non-compliance. Stay tax-ready and avoid costly mistakes!

GST compliance refers to following the rules and regulations outlined in the Goods and Services Tax (GST) law. It includes obtaining timely registration, issuing accurate invoices, filing tax returns on schedule, and maintaining proper records.

A high GST compliance rating boosts business credibility with suppliers, buyers, and tax authorities. Regular ITC reconciliation with GSTR-2A/2B, adherence to e-invoicing norms for turnovers above ₹5 crore, and generating E-Way Bills for goods transport ensure smooth operations, reduce audit risks, and streamline financial transactions.

In this blog, we will explore the key aspects of GST compliance, covering tax filing, ITC management, and documentation requirements. We will also discuss how businesses can improve their GST compliance rating and avoid penalties through proper tax planning and adherence to GST norms.

GST Compliance Checklist for Businesses

Ensuring GST compliance is crucial for businesses to avoid penalties and streamline tax management. Here’s a checklist to help you stay on track with key GST requirements:

  • Register for GST if your turnover exceeds ₹40 lakh (₹20 lakh for services)
  • File GSTR-1 & GSTR-3B on time to avoid penalties
  • Maintain GST-compliant invoices with proper HSN/SAC codes
  • Reconcile Input Tax Credit (ITC) with GSTR-2A/2B
  • Pay GST dues before the due date to avoid interest charges
  • Ensure proper documentation for GST audits
  • Follow e-invoicing rules if turnover exceeds ₹5 crore
  • Generate E-Way Bills for goods transport above ₹50,000

Whats is GST Compliance Rating?

GST Compliance Rating is a score assigned to businesses under the Goods and Services Tax (GST) system in India. It reflects a taxpayer’s adherence to GST regulations, including timely filing of returns, tax payments, and overall compliance with GST laws. The rating is designed to encourage voluntary compliance and transparency in the taxation system.

How is GST Compliance Rating Determined?

The GST compliance score is based on various factors, including:

  1. Timely GST Return Filing – Regular and punctual filing of GSTR-1, GSTR-3B, and other applicable returns.
  2. Tax Payment Discipline – Consistency in paying GST dues without delays.
  3. Accuracy of Tax Filings – Ensuring correct input tax credit (ITC) claims and avoiding mismatches in returns.
  4. Response to Notices – Prompt action on queries, audits, or clarifications raised by tax authorities.
  5. Legal Compliance – Adhering to GST laws, avoiding penalties, and not being involved in fraudulent activities.

The GST rating ranges from 1 to 10, where 10 indicates the highest level of compliance and 1 reflects poor adherence to GST rules.

Benefits of Maintaining a High GST Compliance Rating

Keeping a high GST compliance rating has many resultant benefits for business enterprises, which are as follows:

  • Faster ITC refunds: The likely speed of processing of ITC claims will result in faster refunds and enhanced liquidity, which is very positive from the cash perspective 
  • Lower chances of audit: Those with high compliance ratings are not likely to be picked up for audits, saving time and resources 
  • Higher Supplier and Buyer Trust: A record of compliance is connected with accountability and therefore makes the business and relationships at all steps of the supply chain more reliable 
  • Fewer Punishments and Penalties: Companies that are compliant without fail avoid fines, late fees, and penalties for non-compliance, which may save them a lot of money and stay financially safe.
  • Improved Supplier Relationships: A high GST compliance rating would give suppliers the confidence that their transactions with your business are reliable, and that might eventually improve terms of business and even opportunities

How to Ensure GST Compliance in India?

Filing GST returns is also dependent on the right compliance, encompassing on-time and correct filing. This includes knowledge of the various types of GST returns, their specific purposes, and the respective deadlines by which a return needs to be filed. Such compliance ensures that a business does not incur penalties and boasts a high GST compliance rating. Maintaining timely GST filings and payments helps businesses build a good compliance record, reducing audit risks and improving supplier trust

Types of GST Returns and Their Filing Frequency

Different GST returns have different uses and are filed at intervals. Let’s first see the majority of the GSTR forms holding most relevance:

  • GSTR-1: This will capture details of outward supplies (sales) of goods and services and will be filed either on a monthly basis or quarterly, depending upon the threshold of turnover 
  • GSTR-3B is the consignment return that summarises the tax liability. This summarises all sales, purchases, and ITC claims. All registered taxpayers have to file this on a monthly basis 
  • GSTR-9: It is an annual return that collects all quarterly and monthly returns filed in the financial year. It gives the complete information of all transactions happening in that year.

GST Return Filing Calendar and Checklist

To stay on top of filing deadlines, businesses can refer to a month-wise GST return filing calendar and checklist. GST return deadlines include GSTR-1 (11th of the next month), GSTR-3B (20th of the next month), and GSTR-9 (December 31st of the following financial year). Timely filing prevents penalties and ensures ITC claims.

GST invoices must include the supplier’s GSTIN, invoice number, HSN/SAC codes, taxable amount, applicable tax rates, and a valid signature. Proper invoicing helps businesses claim ITC and ensures audit readiness.

How to Ensure Tax Invoice Compliance?

To generate the GST-compliant tax invoice, businesses would ensure to include the following essential details as required under GST. The following are check boxes for verifying compliance:

  • Supplier’s GSTIN: This is the GSTINof the seller 
  • Invoice No. and Date: The invoice number should be unique and the date of issuance of the invoice 
  • Customer’s GSTIN Details: If the recipient is registered, GSTIN; name; and address 
  • Description of Goods or Services: Detailed description along with appropriate HSN/SAC codes 
  • Quantities and Rate Per Unit: The Quantities along with the Rate per Unit along with the tax value 
  • Taxable Amount and Rate: The CGST, SGST, and IGST Rates applicable for the supply along with the amount of tax for each 
  • Total Invoice Value: A sum total of all taxes including the invoice value
  • Signature: Authorised signature-digital or physical-of supplier.

Input Tax Credit (ITC) Compliance

Input Tax Credit (ITC) forms the central part of the GST structure, whereby businesses can claim credit on various taxes paid on acquisitions and set this credit against the liability of taxes payable on sales. Effective management of ITC is crucial to minimise tax outflow, ensure compliance, and improve cash flow. To claim ITC, businesses must:

  • Ensure suppliers have filed GSTR-1 and reported the invoice.
  • Maintain valid tax invoices and reconcile with GSTR-2A/2B.
  • File GSTR-3B accurately to claim eligible credit

Related Read: Input Tax Credit Under GST

Ensuring Timely GST Payments

GST payments can be made via net banking, credit/debit cards, or NEFT/RTGS through the GST portal. Businesses must generate a payment challan (PMT-06) and pay within the due date to avoid penalties.

Penalties for Late Payments

Late GST payments attract an 18% annual interest and a late fee of ₹50 per day for regular returns or ₹20 per day for NIL returns.

E-Invoicing and E-Way Bill in GST

E-Invoicing is mandatory for businesses with turnover above ₹5 crore, ensuring invoice authenticity and automatic GST reporting. E-Way Bills are required for transporting goods worth over ₹50,000 across state lines.

GST Audit

Businesses with a turnover above ₹5 crore require an annual GST audit by a Chartered Accountant. Proper record-keeping and ITC reconciliation ensure audit readiness.

Conclusion on GST Compliance

Maintaining GST compliance is essential for businesses to avoid penalties, ensure seamless tax filings, and build credibility. Timely GSTR-1 and GSTR-3B filings, proper ITC reconciliation, and adherence to e-invoicing and E-Way Bill regulations help businesses optimize tax efficiency and reduce audit risks.

A strong GST compliance rating fosters trust among suppliers, buyers, and tax authorities, enabling smoother financial operations. Ensuring proper GST invoice documentation, tax payments, and ITC claims enhances cash flow while minimizing liabilities. Compliance with GST norms not only prevents penalties but also strengthens the overall business framework.

By following GST regulations, maintaining accurate records, and meeting filing deadlines, businesses can streamline operations and stay legally compliant. Prioritizing tax transparency, structured documentation, and timely filings allows companies to navigate GST complexities effectively while ensuring sustainable growth and operational stability.

Avoid penalties and streamline your tax filing with expert assistance. Our professionals can help with GST registration, return filing, and ITC reconciliation. Contact us today for a free consultation!

Frequently Asked Questions on GST Compliance

What is the GST Compliance Rating, and how is it calculated?

The GST Compliance Rating scores the indication of compliance of a business to GST regulations; based on returns filed in time, tax payments, and reconciliation of ITC. The better the ratings, the lesser the possibilities of an audit and, consequently, imposition of penalties.

What happens if I miss the GST return deadline?

Late filing attracts a ₹50/day penalty and 18% annual interest on unpaid taxes. Businesses may also lose ITC eligibility.

Can I claim ITC without a GST-compliant invoice?

No. ITC is only allowed if the invoice includes GSTIN, HSN code, tax amount, and supplier details. Ensure all invoices meet GST rules.

What documents are needed for a GST audit?

There is a requirement for business establishments to submit financial statements, GST returns in the form of GSTR-1, GSTR-3B, GSTR-9, purchase and sales invoices, e-way bills, payment receipts, and related supporting documents for ITC claims as part of the process for a GST audit. Internal records include books of accounts and tax invoices by way of verification against the returns filed.

What are the benefits of e-invoicing for GST compliance?

E-invoicing smoothes GST compliance as it automates the generation and reporting of invoices. It increases data precision, enhances the reconciliation of ITCs, reduces errors from manual work, and enables quicker GST return filing. E-invoicing also accelerates tax refunds, reduces the likelihood of audit mismatch, and enhances transparency in the supply chain.

About the Author

Harish Varun, a GST & Tax Consultant at Vakilsearch, holds a Bachelor’s degree in Finance and Taxation, along with an MS in Accounting and Taxation. He specializes in GST, GST filings, and advisory services, helping businesses streamline their tax compliance.

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