Common errors and mistakes in GSTR-1 filing

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Published Date:  14-12-2023   Author:   shibani-paul
common errors and mistakes in gstr filing

Filing goods and service tax efficiently is extremely crucial for any business. It helps to maintain business compliance and uphold the financial integrity of the establishment. In the middle of all the complexities of the taxation procedure, GSTR 1 filing is one of the critical aspects of this process. 

It is common for every business and establishment to encounter various challenges that can lead to mistakes and inadvertent errors during the submission of GSTR1.

In this guide, let us look through some common mistakes and errors that can be prevalent during GSTR1 filing.

Common mistakes and errors in GSTR1

Someone who wants to file a goods and service tax return needs meticulous attention and a keen understanding of the different rules and regulations of taxation. Sometimes, businesses encounter mistakes and errors even after the best intentions and practices. It can inadvertently jeopardize the compliance effort of the business. 

Here are some common errors and mistakes in GSTR1 one can experience while filing for a GST return.

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  • Misreporting of supply, data, and sales

The business must maintain accuracy while recording the outward supplies. It should be done for both taxable supplies and exempt supplies. If it is not done correctly, it can lead to discrepancies during tax audits.

  • Oversight in reporting

Businesses and establishments often assume that meeting the entries related to non-GST supplies can simplify the whole process of filing. However, in-depth, such commissions can cause potential penalties and may trigger inquiries from tax authorities.

  • Inadequate understanding of the harmonized system of nomenclature and service accounting codes

Suppose the business does not properly understand the harmonized system of nomenclature (HSN) and service accounting (SAC) codes. In that case, it can lead to mistakes while filing the goods and service tax return. Sometimes, assigning incorrect codes to services or products can create miscalculated taxes. It may cause discrepancies, demanding swift rectification.

  • Invoice reconciliation error

 Errors related to invoice reconciliation are common mistakes often found while filing GST returns. If the invoice uploaded by the supplier does not match the recipient’s purchase records, it can create a mismatch. Such discrepancies can hinder the input tax credit claim. It can also raise suspicion regarding tax evasion.

  • Neglection of timely filing

Most businesses neglect the timely filing of goods and service tax returns. It is not the best thing to do as it attracts penalties. This negation can sometimes disrupt the flow of input tax credits. It also impacts the financial stability and cash flow of the organization. The business needs to adhere to the deadlines so that complications can be avoided.

  • Overlooking the inclusion of credit and debit notes

If the business overlooks the inclusion of debit and credit notes in filing goods and service tax returns, it can lead to inaccurate and incomplete reporting. Some of these final documents need to be accounted for correctly. It can result in reconciliation challenges and distorted tax liabilities if not done.

  • Lack of awareness

Sometimes, lack of awareness, especially regarding the rectification and amendments, is one of the major concerns in this area. Businesses must promptly rectify errors discovered after filing for goods and service tax returns. It ensures the maintenance of accurate records. If the business fails to do so, it can often complicate the process of future filing and cumulative discrepancies. Sometimes, it may also invite unwarranted legal repercussions.

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Error/Mistake Description
Incorrect Invoice Details – Providing inaccurate details such as invoice numbers, dates, or values can lead to reconciliation issues and compliance challenges.
Mismatch in HSN/SAC Codes – HSN (Harmonized System of Nomenclature) or SAC (Service Accounting Code) discrepancies can lead to classification errors and affect tax calculations.
Missing or Incorrect Nil Returns – Failing to file nil returns when applicable or providing incorrect information on nil returns can result in compliance issues.
Ignoring Amendments – Neglecting to incorporate amendments to invoices or other details can lead to discrepancies between GSTR-1 and GSTR-2A.
Late Filing or Missed Deadlines – Missing the due dates for filing GSTR-1 can result in penalties and impact the overall compliance of the business.
Incomplete B2B Invoices – Failing to include all business-to-business transactions or omitting specific invoices can lead to incomplete reporting.
Inaccurate Place of Supply – Providing the wrong place of supply for goods or services can impact tax calculations and result in compliance issues.
Not Reconciling GSTR-2A Data – Failure to regularly reconcile GSTR-1 data with GSTR-2A can lead to discrepancies in input tax credit claims and compliance challenges.
Incorrect Tax Calculations – Errors in calculating GST amounts can lead to incorrect tax payments, affecting the financial accuracy of the filing.
Lack of Documentation – Insufficient or missing documentation for transactions can pose challenges during audits and impact compliance.
Non-Compliance with E-Invoicing – For businesses required to follow e-invoicing, non-compliance or errors in e-invoice generation can lead to GSTR-1 filing issues.

 

Process of correcting my Gstr 1 mistakes

Rectifying errors during goods and service tax returns requires a systematic approach. If you do not understand the goods and service tax framework, correcting the goods and service tax return mistakes can be difficult during filing. Correcting the mistakes would help maintain legal obligations and the business’s financial integrity. Let us learn how to correct any mistakes related to putting in service tax returns effectively.

  • In the first step, you must identify the mistake’s extent and nature. Sometimes, mistakes can be an incorrect invoice or numerical discrepancy. At other times, it can relate to this match in the HSN code. Hence, the business needs to look for the exact problem or error. It is one of the initial steps towards resolution. Sometimes, all you can do is review the final goods and service tax return and then compare it with the internal records of the business. This process is extremely helpful in such cases.

  • Once you identify the error, you must initiate the proper connection process in the GST portal. First of all, you will have to file an amendment form of GSTR1. Logging into the portal, you can navigate the service tab and select returns. From there, you will get the option of a returns dashboard. Here, you must select the relevant financial year and month to amend. Make sure you choose the proper categorization for changing the error data.

  • Specifically, ensuring the accuracy of the details becomes extremely crucial during the amending process. Ensure you check for a proper invoice quantity, date, numbers, and even tax values to eliminate the chances of repeating any mistakes.

  • Double-checking the invoice details can eliminate the chances of repeating any previous mistakes. The business must include the recipient’s correct goods and service tax identification number while You Are amending business-to-business transactions.

  • Sometimes, the corrections may involve tax amounts and taxable values. In such cases, the business requires issuing credit or debit notes, especially to the recipient. These documents should refer to the original invoice number while clearly outlining the corrections. Such a practice maintains transparency and rectifies any error present in the financial transaction.

  • After the amendment, the business must reconcile the amended data and the present internal records. It confirms the accuracy. With regular reconciliations, the business can enhance the overall compliance process while preventing any future discrepancies.

  • Businesses should also keep proper records of the various amendments. Maintenance of a comprehensive log of all the corrected entries and supporting documents would promptly let the business commit to mistake rectification and ensure transparency during the auditing process.

What is 4A 4B 4C 6B 6C in Gstr 1?

Codes play a major role in categorizing transactions within the GSTR 1 return process. Sections 4A, 4B, 4C, 6B, and 6C are especially important. It denotes the different types of transactions.

  • Section 4A consists of the details of any taxable outward supplies, particularly to registered dealers. For instance, if the business and sales go to services to a registered dealer, where the recipient is liable to pay the tax instead of the supplier, these transactions fall under the domain of Section 4A. Businesses must properly report such supplies for proper input, tax, credit claim, and accurate tax calculation.

  • Section 4B covers the details of taxable outward supplies to registered dealers where the supplier is not liable to pay tax. In this case, the recipients are not responsible for any goods and service tax payment. As you report accurately under this following section, it helps the recipient to claim any ITC for purchases.

  • Section 4C includes the details of exports made under LUT or a letter of undertaking. It captures all the outward supplies that are meant for international markets. Businesses engaged in export activities can utilize the 4C section to provide the necessary information. It results in seamless cross-border transactions while fostering international trade relations.

  • Sections 6B and 6C show adjustments and amendments made to invoices pertaining to the earlier sections. It also ensures that all transactions’ modifications and corrections should be accurately documented.

What is 5A and 5B in GSTR1?

Section 5 relates to the details of all the taxable outward supplies, especially to unregistered people and consumers. Businesses need to record transactions and properly document them. These supplies ensure transparency in the process of taxation.

On the contrary, section 5B details taxable outward supplies, particularly made to end customers. In this section, the business should mention all transactions involving unregistered buyers and individual customers. The business should accurately report under the section to comply with GST regulations.

What are 8A, 8B, 8C, 8D nil-rated supplies?

Section 8B consists of the details of all the nil-rated supplies provided to registered taxpayers. These supplies consist of all goods and services on which the rate of GST is 0%.

Section 8C consists of the details regarding exempted supplies different from nil-rated supplies. The business should distinguish between the nil-rated and exempted supplies during tax calculation and input tax credit.

On the other hand, section 8D contains the details of every non-GST supply. These are the transactions that are not subjected to service tax. These supplies fall outside the purview of goods and service tax that are not taxable under any current regime.

What is 9B in Gstr 1?

Section 9B encompasses that every business that engages in e-commerce provides comprehensive information about the taxable supplies facilitated through the platforms. It includes every sale’s details, ensuring accurate action reporting through any e-commerce operator.

Is RCM shown in Gstr 1?

The reverse charge mechanism or RCM transactions cannot be shown in the GST return. The GST return focuses mainly on the details regarding the outward supplies made in a business. However, RCM transactions show that the recipient is liable to pay the GST instead of the suppliers. It becomes crucial for every business to recognize that part of any recipient is responsible for maintaining accurate GST compliance. 

Frequently Asked Questions 

  • What should be done in case of misreporting sales data in GSTR1? 

One can file an amendment in the GSTR; failing to correct them is reported data.

  • Is there any penalty for incorrect filing?

The penalty for incorrect feeling depends upon the delay in filing.

  • Mention examples of the common mistakes in reporting HSN code in GSTR1.

Some of the common mistakes are using outdated codes, omitting codes, or using incorrect codes. It helps regularly update HSN codes and cross-verify them to prevent errors.

  • Is there any support service or helpline the government provides to assist businesses with filing issues?

Yes, the business can visit the GST official portal for assistance during the filing. Businesses can also seek guidance from any GST consultant or practitioner for expert assistance.

  • What error should the business be cautious of while filing GSTR 2A in case of intra-state transactions?

Businesses need to ensure correct state codes. It helps to avoid misclassification of transactions as inter-state and prevent unnecessary tax.

  • What role does reconciling GSTR-1 data with purchase registers play on error prevention?

If the business indulges in regular reconciliation, it helps in identifying discrepancies between sales and purchase data. It reduces the likelihood of errors in GSTR-1 filings.

  • What happens if there are variations in the taxable value reported in GSTR-1 and the actual transaction value?

If there are any discrepancies in taxable values, it can cause tax overpayment or underpayment. It emphasizes the importance of accurate reporting so that the business can avoid compliance issues.

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Shibani Paul

Shibani Paul holds postgraduate and English graduate qualifications, bringing a wealth of knowledge and expertise to the finance industry, where she has garnered years of experience. In her pursuit of knowledge, she avidly reads and stays abreast of the latest financial developments. Committed to assisting others, Shibani takes pride in providing valuable support for various financial and compliance needs through her writings.

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