1. Deal with your Purchase Vendor only after Proper Verification
It has been observed by the GST department that many small suppliers cheat other businesses by charging the GST but not depositing the same with the government. Therefore GST Department issues time to time guidelines for verifying a vendor. These are some important steps to verify a supplier vendor.
- Always ask for their GST certificate before making any purchase from a new supplier.
- Always ask for a canceled cheque of their current account. If a supplier gives you a canceled cheque of his saving account then it is a sign that that supplier is not registered under GST.
- Always match the name mentioned in the canceled cheque of their current account from the name mentioned in the GST Registration Certificate.
- Always verify the GST Certificate of the new supplier from the Official Website of GST. You can search a GST registered vendor by their GST number on the official website of GST. You must ensure that the details mentioned in the GST Certificate are matching with the details showing online.
- Always check the status of the new supplier on the GST portal and confirm that it is active or canceled. If the status is canceled then you should immediately stop business with that supplier.
- Always check the last GST returns filed by the vendor. If the vendor is irregular in the filing returns then it is a sign that the vendor is not serious about GST filings. You should be stay alert from them.
Dealing with fake GST registered suppliers you may incur extra liabilities of GST, interest, and penalties.
2. Keep Reconciling GSTR 2A with your Purchase Bills
You must reconcile your GSTR 2A form with your purchase ledgers. GSTR 2A contains the details of sales showed by your suppliers. Generally, it is observed that suppliers keep delaying in filing their GST Returns. You must check that all of your purchases showing in the GSTR 2A return.
The important part is that if your purchases are not showing in the GSTR 2A form then it means you cannot legally claim GST credit, therefore you must verify the form regularly.
You can stop payment to your suppliers until they show their sales and GST in your GSTR 2A.
Therefore you may have to pay extra GST, interest & penalties if you didn’t keep an eye over your GSTR 2A.
3. Ensure that you are Following the Rules of your GST Business Category
There are some business categories or schemes for specific types of businesses, for example – for Hotels, Restaurants, Air Travel Agents, etc. there are some special schemes to opt-in. You have the option to opt for the scheme or not. So, before opting into the scheme you must do the math that on which scheme your customers/ clients will be benefitted.
Also, if once opted you must ensure that you calculate and deposit GST as per the scheme. Therefore, you must ensure that you are following the rules of that category or scheme.
4. Ensure to Avail Credit of TDS & TCS in GST
Some categories of businesses, government organizations deduct TDS/ TCS in GST as per section 51 of CGST Act, 2017. So, if some vendor deducts your TDS/ TCS then it shows in your TDS and TCS credit received section under the returns head of the GST online portal. These TDS/ TCS credits are equal to your GST cash balance. You can utilize these credits while paying the GST liabilities.
Therefore it is advisable to check the TDS and TCS credit received section regularly, otherwise, you may lose your GST claim.
5. Only Avail the ITC which is Allowed by Law
It is most important that you must avail the Input GST credit which is allowed by the GST Act, rules, or notifications. There are some input credits that cannot be availed. Therefore you must ensure that those inputs or ITC must be charged as expenses in your books of accounts and not as ITC Credit.
Availing of wrong inputs may lead you to pay the GST along with heavy interest and penalties.
6. Always Reconcile your Sales with GST Returns
It is important that the sales of your book must be matched with the sales shown in your GST Returns. Also, sales must be tally across all types of returns. Therefore, you must reconcile your books sales and GST sales on timely basis.
7. Taking GST Registration on Time
If you are liable to get GST registration then you must get registered within the due time limit. Delaying the GST registration process may cost you a minimum of INR 10,000/-. According to the section 122 of the CGST Act, any taxable person who fails to register under GST even if he/she is legally bound as per the GST Act needs to pay the penalty of INR 10,000 or the amount of tax evaded whichever is higher.
8. Depositing GST within due dates
To avoid interest and late fees, every registered GST dealer must deposit the GST within the due dates.
9. Filing GSTR Returns within due dates
Delaying in GST Returns will result in payment of penalties and late fees. Therefore, one must ensure that the returns are being filed on due time limits.
