Did you know the GST intelligence department has detected an evasion of Rs.1.36 trillion by the year 2023? One of the most common reasons behind this huge number is the unawareness of the benefits of GST.
Moreover, despite an individual who wishes to comply with the GST norms, most of the population is unaware of what GST compliance is, let alone the different types of GST compliance documentation required. Therefore, this article aims to cover in detail about GST compliance and numerous types of GST documentation as follows:
- GST Registration
- GST Return
- GST Audit
- GST invoice format
So, in case you are someone who wishes to learn about the documentation requirements for GST compliance, read the article till the end.
What is GST Compliance?
GST (Goods and Services Tax) compliance refers to the adherence and fulfilment of all the rules and regulations outlined under the GST system. It involves businesses ensuring that they follow the prescribed procedures for collecting, filing, and forwarding GST to the government. GST compliance also includes the following:
- Timely and accurate filing of GST returns
- Maintaining proper records of transactions
- Adhering to the GST rates applicable to their goods or services
Moreover, verification of input tax credits is also done in GST compliance. It allows businesses to offset the GST they paid on purchases against the GST they collected on sales.
Why is it Important to Meet GST Compliance?
Meeting GST compliance can benefit your business in several ways. Some of them are given as follows:
1. Legal Requirement
Adhering to GST compliance is a legal obligation. Therefore, failure to comply can result in penalties, fines, and legal consequences. It also gives businesses a framework of law to operate within.
2. Avoid Penalties
Non-compliance to GST also leads to hefty penalties and interest charges. You can avoid these financial repercussions by meeting GST requirements and maintaining your financial health.
3. Smooth Operations
GST compliance ensures smooth business operations. Timely filing of returns and accurate record-keeping prevent disruptions, allowing you to focus on its core activities without the burden of legal issues.
Complying with GST regulations enhances a business’s credibility. It builds trust among customers, suppliers, and stakeholders, who see the business as reliable and transparent in its financial dealings.
5. Input Tax Credit Benefits
Meeting GST compliance documentation requirements enables you to claim input tax credits. This means you can compensate the GST paid on purchases against the GST collected on sales, improving cash flow and reducing the overall tax burden.
6. Government Cooperation
Compliant businesses are more likely to receive cooperation from government authorities. This can be beneficial in various ways, such as easier access to government schemes and licenses.
What is GST Registration?
GST registration is the process through which businesses officially enroll with the government to become a part of the Goods and Services Tax system. It involves providing necessary details about the business, such as:
- Legal name
- Type of business
- Goods or services in business
Once registered, the business obtains a unique GST identification number (GSTIN). This registration is mandatory for businesses with a certain turnover threshold, enabling them to collect GST from customers on sales.
Moreover, it allows you to claim input tax credits on the GST paid for its purchases. It also ensures that the tax authorities recognize businesses and comply with the tax regulations, contributing to a transparent and accountable taxation system.
Also Read: All You Need To Know About GST Registration
What are the Types of GST Registration?
Goods and Services Tax registration in India encompasses various categories to accommodate the diverse nature of businesses and taxpayers. Therefore, understanding the types of GST registration is crucial for individuals and entities engaging in economic activities. Some of the primary categories of GST registration are:
1. Normal Taxpayer
The majority of businesses operating in India fall under the Normal Taxpayer category. This registration is designed for entities conducting regular business activities within the country. Not requiring any deposit, Normal Taxpayer registration provides unlimited validity. This simplifies compliance for businesses engaged in continuous operations.
2. Composition Taxpayer
Composition Taxpayer registration is applicable for those seeking a simplified taxation approach. You can pay a flat GST rate by enrolling under the GST Composition Scheme. This further eases the tax calculation process. However, the trade-off is the inability to claim input tax credit. This category is ideal for small businesses looking for a straightforward tax structure.
3. Casual Taxable Person
If you temporarily establish stalls or seasonal shops, you can opt for Casual Taxable Person registration. A deposit equivalent to the expected GST liability during the active registration period is required. This type of registration usually remains active for three months, accommodating the temporary nature of the business.
4. Non-Resident Taxable Person
The Non-Resident Taxable Person category is tailored for individuals located outside India. However, they must engage in taxable transactions with residents within the country. Such a registration involves a deposit matching the anticipated GST liability during the active registration period, which is limited to three months.
What are the Documents Required for GST Registration?
Some of the key documents required during GST registration are:
|Category of persons
|Documents required for GST registration
|Sole proprietor / Individual
|Partnership firm/ LLP
|Company (Public/ Private/ Indian/ foreign)
What is a GST Invoice?
A GST invoice is a crucial document in the Goods and Services Tax (GST) system that serves as evidence of a sale or service transaction. It distinguishes between the State Goods and Services Tax, Central Goods and Services Tax, the Goods and Services Tax Compensation Cess, and Integrated Goods and Services Tax.
Compliance with proper invoicing is vital for businesses to claim input tax credits and maintain transparency in their financial transactions. This further contributes to a smooth and accountable tax system.
What are the Components of the GST Invoice?
A GST invoice is a comprehensive document that includes several key components, each providing specific information about a transaction. Some of the main components of a GST invoice format are:
1. Invoice Header
The top of the invoice typically includes the word “Tax Invoice” or “Bill of Supply,” indicating the type of transaction. It also includes the invoice number and date of issue.
2. Buyer and Seller Details
This section includes the legal address, name, and Goods and Services Tax Identification Number of the buyer and seller. These details are crucial for identification and tax compliance.
3. Description of Goods or Services
The invoice provides a clear and detailed description of the goods or services being supplied. This includes information such as product names, quantities, and unit prices.
4. HSN or SAC Code
The Harmonized System of Nomenclature (HSN) code for goods or the Service Accounting Code (SAC) for services is mentioned. This coding system helps in the systematic classification of goods and services for taxation purposes.
5. Quantity and Unit
It involves the specification of the quantity of goods or services supplied and the corresponding unit (like kilograms, liters, hours, etc.). It helps ensure accuracy and transparency in the transaction.
6. Total Value
The total value of the goods or services before the application of taxes is mentioned. This is the sum of the quantity multiplied by the unit price.
7. Applicable GST Rates
The applicable GST rates for CGST, SGST, IGST, and GST Compensation Cess are clearly indicated. This helps in the proper calculation of the tax amount.
8. Tax Breakup
The invoice provides a detailed breakup of the tax amount. This shows the CGST, SGST, IGST, and GST Compensation Cess separately.
9. Final Amount Payable
The total amount payable, including the base value and the total tax amount, is mentioned prominently. This is the amount the buyer needs to pay to the seller.
10. Signature and Seal
The authorized signatory of the business typically signs the invoice; if applicable, a company seal may be affixed. This represents the affirmation of the supplier and the authenticity of the goods and services.
What is a GST Return?
GST return is a document businesses registered under the GST system submit to the tax authorities. It contains details of their income, expenses, and the corresponding GST paid.
GST returns must be filed periodically, usually monthly or quarterly, depending on the business’s turnover. These returns provide a comprehensive overview of the business’s financial transactions, allowing the government to calculate the tax liability or refund.
What are the Types of GST Return Filing?
There are numerous types of GST return filing documentation, each with its specific purpose. You can learn in-depth about them from the table below:
|Details of outward supplies of taxable goods and/or services affected.
|11th of the next month.
|Quarterly (If opted under the QRMP scheme)
|13th of the month succeeding the quarter.
|IFF (Optional by taxpayers under the QRMP scheme)
|Details of B2B supplies of taxable goods and/or services affected.
|Monthly (for the first two months of the quarter)
|13th of the next month.
|Summary return of outward supplies and input tax credit claimed, along with payment of tax by the taxpayer.
|20th of the next month.
|Quarterly (For taxpayers under the QRMP scheme)
|22nd or 24th of the month succeeding the quarter.
|Statement-cum-challan to make a tax payment by a taxpayer registered under the composition scheme under Section 10 of the CGST Act.
|18th of the month succeeding the quarter.
|Return for a taxpayer registered under the composition scheme under Section 10 of the CGST Act.
|30th of the month succeeding a financial year.
|Return to be filed by a non-resident taxable person.
|20th of the next month.
(Amended to 13th by Budget 2022; yet to be notified by CBIC.)
|Return to be filed by non-resident OIDAR service providers.
|20th of the next month.
|Return for an input service distributor to distribute the eligible input tax credit to its branches.
|13th of the next month.
|Return to be filed by registered persons deducting tax at source (TDS).
|10th of the next month.
|Return to be filed by e-commerce operators containing details of supplies effected and the amount of tax collected at source by them.
|10th of the next month.
|Annual return by a regular taxpayer.
|31st December of the next financial year.
|Self-certified reconciliation statement.
|31st December of the next financial year.
|Final return to be filed by a taxpayer whose GST registration is cancelled.
|Once when the GST registration is cancelled or surrendered.
|Within three months, of the date of cancellation or date of cancellation order, whichever is later.
|Details of inward supplies to be furnished by a person having UIN and claiming a refund
|28th of the month following the month for which the statement is filed.
|Statement to be filed by a principal/job-worker about details of goods sent to/received from a job-worker
(for AATO up to Rs.5 crore)
(for AATO > Rs.5 crore)
|25th April where AATO is up to Rs.5 crore.
What are the Documents Required for GST Return Filing?
Certain key documents are required for GST return filing documentation through the GST portal. These include the following:
- Customer GSTIN
- Invoice Type
- Place of Supply
- Comprehensive list of invoices covering both Business-to-Business (B2B) and Business-to-Consumer (B2C) services
- Invoice Number
- GST Rate
- Total amounts for Central Goods and Services Tax, Integrated Goods and Services Tax, applicable GST Cess, and State Goods and Services Tax
- Summary of Debit and Credit Notes
- Aggregated details of both intrastate and interstate sales
- Taxable Value
- HSN (Harmonized System of Nomenclature) code-wise summary details
What is a GST Audit?
A GST audit is a thorough examination of a taxpayer conducted by the tax authorities. It involves checking their financial records and statements and compliance with Goods and Services Tax regulations.
Businesses with a turnover exceeding the prescribed limit are typically subject to GST audits. This process helps maintain the integrity of the GST system by ensuring transparency and adherence to tax laws.
What is the Purpose of GST Audit Documentation?
GST audit documentation is a necessary measure. Some of the ways it proves to be helpful are:
1. Verification of Accuracy
GST audit documentation verifies the accuracy of the information provided in GST returns. This ensures that financial records align with the actual transactions conducted by the taxpayer.
2. Assessment of Tax Liability
Tax authorities assess the taxpayer’s proper payment of taxes through audit documentation. This includes the accurate calculation and GST remittance on input and output supplies.
3. Identification of Non-Compliance
The documentation helps identify non-compliance issues or discrepancies in the taxpayer’s adherence to GST laws. This includes improper input tax credit claims, underreporting of sales, or other regulatory violations.
4. Evaluation of Business Processes
GST audit documentation allows authorities to evaluate the taxpayer’s internal controls and business processes. This ensures they are robust and in line with GST regulations.
5. Audit Trails and Transparency
Maintaining detailed documentation creates audit trails, offering a transparent view of taxpayers’ financial activities. This transparency is essential for establishing accountability and trust in the tax system.
6. Legal Compliance and Penalties
Proper documentation is crucial for legal compliance. In the event of non-compliance, the audit documentation serves as evidence. Moreover, inadequate documentation may lead to penalties or legal consequences.
What are the Documents Required for GST Audit?
It is important to remember that additional documents may be requested for the GST Audit depending on the nature of the business. However, the following documents are mandatorily required from a taxpayer to initiate the GST Audit:
- Balance Sheet and P&L account, along with schedules
- Trial balance specific to the respective GSTIN
- Income Tax Audit Report, which includes Form 3CA, 3CD, etc.
- Statutory Auditor’s Report
- Cost Audit Report, if applicable
- GST Returns for various periods, such as GSTR-1, GSTR-3B, GSTR-2A/2B, GSTR-9, GSTR-9C, etc.
- Data showing Input Tax Credit (ITC) taken, with an invoice/Bill of Entry-wise breakup.
In conclusion, GST compliance is a detailed process that needs careful paperwork at different steps. Starting with getting registered, GST returns, and audits. However, you must keep accurate records for this journey, as this is not just about making things run smoothly but also about avoiding legal troubles. Moreover, the requirement for GST compliance documentation may experience some alterations from time to time. So, make sure you double-check it!
Frequently Asked Questions
Q1. How do I Check my GST Compliance Rating?
When a firm is registered, the owner is given a GSTIN (Goods and Services Tax Identification Number). This number will assist you in keeping track of your compliance rating. Once the scores are made available on the GST Network (GSTN), you may determine your rating using this number.
Q2. How is GST Calculated?
The formula to calculate GS is GST amount = (Original Cost*GST Rate Percentage) divided by 100. Original Cost + GST Amount equals Net Price.
Q3. What is the GST Percentage?
GST rates in India are broken down into four slabs for different goods and services: 5% GST, 12% GST, 18% GST, and 28% GST.
Q4. Who is Eligible for GST Registration?
If you sell goods inside the same state and your yearly sales exceed Rs. 20 lakh, you must register for GST. The same is valid for service providers in the same state with yearly revenues of Rs. 40 lakh. In addition, suppliers within the same state must register for GST.
Q5. Who Should pay GST?
In most cases, the seller of goods or services is required to pay GST. However, in some circumstances, such as imports and other declared supplies, the obligation may be shifted to the recipient via the reverse charge process.
Q6. Who can Issue a GST Invoice?
A registered person delivering taxable services should provide a tax invoice. This invoice must specify the description, value, tax levied thereon, and other particulars as required in the Invoice Rules. Moreover, this invoice must be provided before or after the performance of service but within a prescribed period.
Q7. What is the Limit of the GST Invoice?
E-invoicing is available to GST-registered individuals whose total revenue in any preceding fiscal year (2017-18 to 2021-22) surpassed Rs.20 crore. It will apply to those with a turnover of over Rs.5 crore up to Rs.10 crore beginning August 1, 2023.
Q8. Is a Handwritten GST Invoice Valid?
According to the Information Technology Act of 2000, the GST invoice must be signed either by hand or digitally. Moreover, this must be done by the supplier or one of their representatives.
Q9. Who Will File GSTR 9 and 9C?
GSTR 9 is an Annual Return all taxpayers must file, and GSTR 9C is an Annual Reconciliation Statement that taxpayers with over Rs. 2 crores annual aggregate turnover should file. Many taxpayers are often confused about who should file the returns.
Q10. What is Form ADT-1?
ADT-1 is a document used to inform the Company Registrars of the appointment of a company’s first auditor. The Companies Act of 2013 requires that every firm appoint its first auditor within thirty days of its establishment.