GST was introduced in India in 2017. It replaced the previous indirect tax regime which had many drawbacks like double taxation, tax evasion problems, etc. With the commencement of GST, a new era was brought in which is useful in so many ways than the pre-GST era. For example, the registered person can get a refund in the name of an Input Tax Credit. This blog discuss in detail about the Common Mistakes to Avoid During GST Registration.
Businesses including small-scale and medium-scale get benefits by registering under GST. GST registration has to be done by the business which crosses the threshold limit. For the product suppliers, the threshold limit is 40 lakhs, and for the service providers, the threshold limit is 20 lakhs. In certain states, the threshold limit varies and has a threshold limit of 10 lakhs for product suppliers. GST is an indirect tax levied on goods and services in India. The object of its implementation is to simplify the tax system and avoid double taxation. At the time of GST Registration or filing of GST return, there are common errors/ mistakes GST-registered taxpayers make which are listed below. The taxable person should be cautious in GST compliance to avoid unnecessary litigation and compliance issues.
Types of GST Registration
Compulsory Registration – The business owners are obligated to register under GST irrespective of their turnover. This includes situations where the business owners are involved in e-commerce activities, interstate supplies, etc.
Regular Registration – If the businesses exceed the threshold limit, then they are required to register under GST. GST rate may vary from commodity to commodity.
Composition Scheme Registration – The business that makes taxable supplies, if it exceeds the aggregate turnover of 40 lakhs or if the service providers exceed the threshold limit of 20 lakhs, they have to register under GST. If the businesses that exceed these threshold limits do not exceed a turnover of 1.5 crores, then they can register under the composition scheme. It is to help small taxpayers. Businesses that have a turnover of up to 1.5 crores can opt for the Composition Scheme and also, avail of benefits.
Voluntary Registration – Under this registration, the business owners are not obligated to compulsory registration but still choose to register under GST voluntarily. GST has various benefits like input tax credits and so on. To avail of these benefits, the business owners voluntarily register under GST.
No Registration – Other business owners who did not meet the registration threshold limit need not register under GST. In the case of businesses, if the aggregate turnover does not exceed 40 lakhs or 20 lakhs as per eligibility, then they are not required to register under GST. Also, the agriculturists need not register for the supply of crops. The businesses which are not covered under compulsory registration need not register either.
Common Mistakes that Need to be Avoid During GST Registration
GST is a significant tax reform in India that has streamlined the taxation system for businesses and it is also essential to get it right to ensure smooth operations and compliance with the law. It is important to ensure compliance with tax regulations. Following are the common errors/ mistakes that need to be avoided by business owners so that they can complete hassle-free GST registration.
1. Incomplete Documentation
Incomplete documentation while doing GST registration is one of the most common mistakes. People usually miss or avoid reading all the important documents before GST registration. It may affect their registration process thus to avoid such mistakes always complete all the necessary documents in advance.
2. Incorrect Business Structure
Every business is of a different type and needs a different structure, thus GST registration should also be done accordingly. By selecting the wrong GST category, many people can face complications in GST registration. That’s why selecting the correct category can ease your GST registration process.
3. Incorrect PAN Details
Accuracy in giving the correct document details is mandatory. In case, you fill in wrong or incorrect PAN details while GST registration then you may lead to some hefty penalties. To avoid such mistakes, you must fill in the accurate information or can also take the help of professional experts of Legal251.
4. Inaccurate Business Address
Any irrelevancy in the business address is also a common mistake that can delay your GST registration process. To avoid so, always use your officially updated address without any errors and complete the registration process in one go. You can move forward with the address update request if your business address is recently changed or updated.
5. Mismatch in Business Name
Every business that is about to do the GST registration may face the problem of mismatching the business name. It can happen when your submitted documents and registrations have different information. So before you proceed with GST registration, it becomes important to stay consistent with your business name.
6. Not Including Additional Places of Business
If your business has multiple branches then while GST registration you must include its information. This is another common mistake that needs to be avoided when you follow the registration process.
7. Incorrect Details of Partners or Directors
Personal details like, the name, and address, of proprietors or directors are important. It is important to check and verify personal information before submission of the application.
8. Ignoring the TDS/TCS Requirement
TDS is Tax deducted at source and TCS is tax collected at source. The business owner should mention in the application if TDS and TCS are applicable. They should include TDS and TCS information as required and ensure all the provisions have been complied with.
9. Late Registration
A delay in GST registration beyond the threshold limit is also a common mistake business owners make. Once the business exceeds with threshold limit, the owner is obligated to register under GST. Noncompliance will lead to penalties. Once the business crosses its threshold turnover limit, GST has to be registered promptly.
10. Not Verifying Details Before Submission
Verifying all the details once again before submission is very useful as you get to correct the mistakes, if any. Applying without reviewing all the details is a mistake. So, thoroughly reviewing the application before submission is important to avoid errors.
11. Ignoring GST Composition Eligibility
The business owner should choose a proper GST registration for his business structure. Opting for the composition scheme without even meeting the eligibility criteria is a common mistake too. The owners should ensure their businesses qualify for the composition scheme before opting for it.
Thus, it is essential to be diligent, provide accurate information, and stay updated with the GST regulations to ensure compliance and benefit from the advantages of this tax system.
Important Points to be Noted
- Every taxpayer needs to avoid the mistake of entering GST liability or input tax credit under the wrong GST head.
- Nil-rated supplies are taxable but have a 0% GST rate.
- In case of no transactions during an applicable tax period, every taxpayer needs to file an NIL return.
- Without filing form GSTR 1, some taxpayers file GST 3B on a monthly basis.
- Notably, GSTR-1 requires invoice-wise data to be uploaded of all outward supplies such as the number and date of invoice, place of supply, rate of tax, and more.
- Ignoring GST notices and compliances can drive you to legal troubles and heavy penalties.
- It is important for every taxpayer to keep all the significant updates that are officially released by the tax authorities.
- Filing wrong information during GST registration can affect the taxpayer with potential penalties.
- Every taxpayer needs to ensure that the tax rates of the items are calculated as per the tax slabs given by the GSTN.
- By avoiding common mistakes taxpayers can minimize potential penalties, monetary penalties, and any legal issues.
End Notes!
To avoid all such common mistakes during the GST registration process, you need to stay updated with all the important guidelines. It is an important process for all businesses to ensure compliance with tax regulations, and accuracy in return filing. Thus completing the registration process with expert support is highly recommended.
For the best GST registration support, you can contact Legal251 and easily complete the process from anywhere. We not only complete the registration process but also help you in completing those documents which are not available. We also provide you with the best legal support not only for GST registration but also in more than 251 legal services.
