GST Compliance: Navigating India's Indirect Tax Framework
The Goods and Services Tax (GST), implemented in July 2017, represents India's most significant tax reform, subsuming multiple indirect taxes into a unified system. For businesses operating in India, GST compliance is not merely a legal obligation—it's a fundamental aspect of business operations that affects pricing, cash flow, vendor relationships, and competitiveness.
This comprehensive guide covers the entire spectrum of GST compliance requirements, from monthly return filings and invoicing rules to input tax credit management and annual audits. Understanding these requirements is essential for businesses to avoid penalties, optimize tax positions, and maintain smooth operations.
GST Return Filing Overview
GST compliance primarily revolves around timely and accurate filing of returns. The return structure varies based on taxpayer category and turnover. Regular taxpayers must file monthly returns, while composition scheme taxpayers have quarterly obligations.
| Return Form | Purpose | Due Date | Who Must File |
|---|---|---|---|
| GSTR-1 | Outward supplies details | 11th of next month | Regular taxpayers (Monthly) |
| GSTR-3B | Summary return with tax payment | 20th of next month | All regular taxpayers |
| GSTR-9 | Annual return | 31st December | All taxpayers (except some) |
| GSTR-9C | Reconciliation statement | 31st December | Turnover above ₹5 crore |
| CMP-08 | Composition return | 18th of month after quarter | Composition taxpayers |
Monthly Compliance Calendar
11th of Every Month
File GSTR-1 (or use Invoice Furnishing Facility for QRMP taxpayers). Declare all outward supplies (B2B, B2C, exports, advances) made in the previous month.
13th of Every Month (QRMP only)
File Invoice Furnishing Facility (IFF) for B2B supplies (optional, for those who want to pass credit to recipients monthly).
20th of Every Month
File GSTR-3B and pay tax liability. This is the crucial compliance date as it involves actual tax payment. Late payment attracts interest at 18% per annum.
Monthly Reconciliation
Reconcile GSTR-2B (auto-drafted input tax credit statement) with purchase register. Identify missing credits and follow up with vendors.
GST Invoicing Requirements
Mandatory Invoice Fields
- • Name, address, GSTIN of supplier
- • Invoice number (unique, consecutive)
- • Date of issue
- • Recipient details (if registered)
- • HSN code of goods/services
- • Description and quantity
- • Taxable value and GST rate
- • Amount of tax (CGST, SGST, IGST)
- • Total invoice value
- • Signature/digital signature
Special Invoicing Rules
- • E-invoicing mandatory for turnover above ₹5 crore
- • B2C invoices: Can use simplified format
- • Export invoices: Must include shipping bill details
- • Credit/debit notes: Reference original invoice
- • Bill of supply: For composition dealers/exempt supplies
- • Delivery challan: For job work, goods on approval
Input Tax Credit (ITC) Management
Input Tax Credit is the cornerstone of GST, allowing businesses to claim credit for tax paid on inputs, input services, and capital goods. Proper ITC management directly impacts business cash flow and profitability.
ITC Eligibility
- ✓ Tax invoice or debit note available
- ✓ Goods/services received
- ✓ Tax actually paid to government
- ✓ Return filed
- ✓ Within time limit (earlier of Sept return or annual return)
Blocked Credits (Section 17(5))
- ✗ Motor vehicles (except specific use)
- ✗ Food, beverages, outdoor catering
- ✗ Beauty treatment, health services
- ✗ Construction of immovable property
- ✗ Goods/services used for exempt supplies
E-Way Bill Requirements
When is E-Way Bill Mandatory?
Inter-state movement: Required for goods valued above ₹50,000
- • Supply transactions
- • Returns and job work
- • Exhibition or display
- • Sale on approval basis
Intra-state movement: Varies by state (most states follow ₹50,000 threshold)
- • Validity: 1 day for every 200 km
- • Can be extended if transit delayed
- • QR code on e-way bill for verification
Penalty Structure for Non-Compliance
| Violation | Penalty/Late Fee |
|---|---|
| Late filing GSTR-1 | ₹200 per day (₹100 CGST + ₹100 SGST), max ₹5,000 |
| Late filing GSTR-3B (nil return) | ₹50 per day (₹25 CGST + ₹25 SGST) |
| Late filing GSTR-3B (with tax) | ₹200 per day, max ₹10,000 |
| Interest on late payment | 18% per annum from due date to payment date |
| Non-issuance of invoice | Higher of ₹10,000 or tax due |
| Wrongful ITC claim | 100% of tax involved + interest + penalty |
GST Compliance Best Practices
Process
- ✓ Automate invoicing and returns
- ✓ Monthly reconciliation of ITC
- ✓ Vendor compliance tracking
- ✓ Regular HSN verification
Documentation
- ✓ Maintain organized records
- ✓ Preserve invoices for 6 years
- ✓ E-way bill documentation
- ✓ Credit note tracking
Monitoring
- ✓ Track filing deadlines
- ✓ Monitor vendor compliance
- ✓ Regular GSTR-2B reconciliation
- ✓ E-invoicing compliance