Goods and Services Tax (GST) is a complete tax framework that has streamlined indirect taxation in India. For new businesses and adhering to GST compliance is critical for smooth operations and avoiding penalties.

This guide by CA Manish Mishra simplifies GST compliance for entrepreneurs and startups.

Basics GST

GST is a destination-based tax levied on the supply of goods and services. It is categorized into threee category:

- CGST (Central GST): Collected by the central government.

- SGST (State GST): Collected by the state government.

- IGST (Integrated GST): Levied on interstate transactions and imports.

Threshold for Registration:

1. For Goods:

   • ₹40 lakhs annual turnover in most states.
   • ₹20 lakhs in special category states (e.g., Arunachal Pradesh, Manipur).

2. For Services:

   • ₹20 lakhs annual turnover in most states.
   • ₹10 lakhs in special category states.

3. For Composition Scheme:

   • ₹50 lakhs turnover for service providers.

4. E-commerce Operators:

   • Mandatory registration, regardless of turnover.

5. Inter-State Supply:

   • Mandatory for goods; exempt for services below ₹20 lakhs turnover.

Special Cases:

• Mandatory for reverse charge, agents, input service distributors, and non-residents.
• Voluntary registration is available for input tax credit and credibility.

GST Registration Process

GST registration is the first step to compliance. 

- Visit the GST Portal: www.gst.gov.in

- Provide Details: Submit business information, PAN, Aadhaar, bank account details, and proof of business address.

- Verification: Your application is verified, and a unique GSTIN (GST Identification Number) is issued.

Tip: Ensure all details are accurate to avoid delays or rejections.

Maintain Proper Invoices

GST-compliant invoices are mandatory. Key elements include:

- Supplier details (name, address, GSTIN)

- Invoice number and date

- Description of goods/services

- HSN/SAC codes

- Taxable value and applicable GST rates

Tip: Use invoicing software to automate compliance.

File GST Returns

Timely filing of GST returns is critical. Types of returns include:

- GSTR-1: Details of outward supplies (monthly or quarterly).

- GSTR-3B: Summary return of sales, purchases, and tax liability (monthly).

- GSTR-9: Annual return summarizing all transactions.

Deadlines: Adhere to deadlines to avoid late fees and penalties.

Input Tax Credit (ITC)

ITC allows businesses to claim credit for GST paid on purchases. Conditions for claiming ITC:

- Supplier must have filed GST returns.

- Goods/services must be used for business purposes.

- Tax invoice or debit note is available.

Tip: Regularly reconcile purchase data with supplier filings to claim ITC without discrepancies.

Avoid Common GST Pitfalls

- Late Registration: Register promptly if your business exceeds the turnover threshold.

- Missing Deadlines: File returns on time to avoid penalties.

- Incorrect HSN/SAC Codes: Use the correct codes for your goods or services.

- Mismatch in Returns: Ensure consistency between GSTR-1 and GSTR-3B to avoid notices.

Use Technology for Compliance

Adopt GST-compliant software to streamline:

- Invoice generation

- Filing returns

- ITC reconciliation

- Maintaining records for audits

Popular tools like Tally, ClearTax, and Zoho Books can simplify compliance tasks.

Seek Professional Help

GST laws can be challenging. A GST advisor consultant can provide expert guidance, confirming your business remains compliant. We are a team of Chartered Accountants at GenZCFO and can help as Virtual CFO if you need any professional help.

Keep Up with GST Updates

GST laws evolve frequently. Stay informed about changes in tax rates, filing procedures, and government notifications to ensure seamless compliance.

GenZCFO Advice

GST compliance is a cornerstone of a legally sound and efficient business. At GenZCFO, we help you by understanding the basics, adhering to filing timelines, and leveraging technology, new businesses can simplify GST compliance and focus on growth. Contact us for a proactive approach today that will save time, effort, and potential penalties tomorrow.