GST Returns

Common mistakes in filing of GST returns

Prior to the GST regime, the VAT system existed, which allowed revision of the returns in case any error was identified. But such privilege is not allowed in case of filing returns under GST. Till the time such privilege is not made available under GST, the assessee needs to be extremely careful to avoid committing mistakes in filing of GST returns in order to avoid any unnecessary hardships in the future.

What are the common mistakes in filing of GST returns?

Incomplete Aadhaar Authentication by the taxpayer

One of the mistakes in filing of GST returns is incomplete Aadhaar authentication of the taxpayer. Rule 10B has been notifies from 1^st January 2022 onwards which mandates the taxpayer to get his Aadhaar authentication done for the following purposes:

• To file application for revocation of cancellation of GST registration
• To file Refund Application in form RFD-01
• To claim refund under rule 96 of the IGST paid on goods exported outside India

If the taxpayer fails to get his Aadhaar authentication done, then it may lead to a number of problems for him such as in case where his GST registration has been cancelled and when he applies for revocation of such cancellation, he realises there is mismatch of information between the number mentioned in his Aadhaar and the number in GST database. Therefore, it is always recommended for a taxpayer to get his Aadhaar authentication done.

Non-compliance with Rule 86B

Non-compliance with the Rule 86B on restriction on the use of electronic cash ledger falls among the many mistakes in filing of GST returns. Rule 86B came into effect from 1^st January 2021. This rule states that the taxpayer is not supposed to use the amount in the electronic cash ledger to discharge his liability towards output tax in excess of 99% of such tax liability. In cases where the value of the taxable supplies other than exempt supply and zero rated supply exceed 50 lakh rupees.

The above restriction shall not apply in the following cases:

• Where the said person or the proprietor or karta or MD or any of its two directors, Whole Time Directors, Members of Managing Committee of Associations or Board of Trustees as case may be, have paid more than 1 lakh rupees as income tax under Income Tax Act, 1961 in each of the two financial years for which the time limit to file the ITR under Section 139(1) of the Act has expired or
• The registered person has received a refund amount which is more than 1 lakh rupees in preceding financial year on account of unutilised ITC under clause (i) of the first proviso of section 54(3) or
• The registered person has received a refund amount which is more than 1 lakh rupees in preceding financial year the on account of unutilised ITC under clause (ii) of the first proviso of section 54(3) or
• The registered person has discharged his liability towards the output tax through electronic cash ledger for an amount which is in excess of one percent of the total output tax liability which is applied cumulatively upto to the said month in the current financial year or
• The registered person is either a government department or a Public Sector Undertaking or a local authority or a statutory authority

The GST department^[1] has sent notices of non-compliance of Rule 86B to many taxpayer in recent times. Therefore, it becomes important for those taxpayers whose monthly taxable value exceeds Rupees 50 lakhs to check whether they have complied with Rule 86B or not.

Taxpayers not claiming TDS and TCS

It is observed in several times that there is lack of awareness among the taxpayers related to claiming of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) and commit mistakes in filing of GST returns under the provisions of GST.

Under the scheme of GST, TDS is deducted by the Central Government and State Government, Government Agencies, Local Authority and notified persons at the rate of 1% where the total value of supply under a contract exceeds the amount of 2.5 lakh Rupees as per the invoice exclusive of GST. This TDS is required to be deposited in the credit account of government which can be claimed by the recipient. This TDS reflects in the Electronic Cash Ledger of the assessee which can then be used by the assessee to pay off the GST liability including the liability under Reverse Charge Mechanism.

According to GST, every e-commerce operator need to collect an amount equal to 1% percent of the net value of the taxable supplies made using its platform by the suppliers where the e-commerce operator collects the consideration made against such supplies. This TCS is required to be deposited in the credit account of government which can be claimed by the recipient. This TCS reflects in the Electronic Cash Ledger of the assessee which can then be used by the assessee to pay off the GST liability including the liability under Reverse Charge Mechanism.

The false assumption on part of the taxpayers that TDS/TCS under Income Tax and accounting it for the same is among one of the mistakes in filing of GST returns. The TDS/TCS not claimed by the taxpayer is a direct loss to them. 

Conclusion

With the new GST regime in place where the liberty of changing the returns made by the taxpayer is not present, it is extremely important to not to commit mistakes in filing of GST returns. The mistakes can be in the form of the Incomplete Aadhaar Authentication by the taxpayer, non-compliance with the Rule 86B on restriction on the use of electronic cash and not claiming TDS and TCS is another mistake under GST as the TDS/TCS not claimed by the taxpayer is a direct loss to him. 

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