Filing Goods and Services Tax (GST) returns is a crucial compliance requirement for every registered business in India. It helps the government track tax liabilities and ensures businesses remain in good standing with tax authorities. However, due to the technical nature of GST returns and frequent updates to tax laws, many taxpayers—especially small businesses—end up making mistakes that could lead to penalties, interest, or even a blocked GSTIN.
In this article, we will explore some of the most common mistakes businesses make while filing GST returns, and how you can avoid them to stay compliant and hassle-free.
1. Incorrect or Missing Invoices
One of the most frequent mistakes businesses make is uploading incorrect invoice details or forgetting to upload them altogether.
Common issues:
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Wrong GSTIN of the customer
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Incorrect invoice number or date
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Mismatch in taxable value or tax amount
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Uploading B2B invoices as B2C or vice versa
Why it matters:
Incorrect invoice details lead to a mismatch between GSTR-1 (outward supply) and GSTR-3B, resulting in notices or disallowance of input tax credit (ITC) for your customers.
Avoid this by:
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Double-checking all invoice details before uploading
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Using automated GST software to reduce manual errors
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Ensuring real-time invoice recording
2. Missing the Due Dates
GST return filing online is time-sensitive. Missing the deadlines for returns like GSTR-1 and GSTR-3B can result in late fees and interest charges.
Penalties:
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₹50 per day (₹25 CGST + ₹25 SGST) for regular returns
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₹20 per day (₹10 CGST + ₹10 SGST) for nil returns
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18% interest on the outstanding tax liability
Avoid this by:
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Keeping a GST calendar with due dates
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Setting up reminders or using compliance tools
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Filing nil returns even if there’s no transaction
3. Mismatch Between GSTR-1 and GSTR-3B
Many businesses report sales differently in GSTR-1 and GSTR-3B, leading to data mismatches and potential scrutiny from GST authorities.
Example:
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GSTR-1 shows ₹10 lakhs of outward supply
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GSTR-3B shows ₹8 lakhs
Consequences:
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GSTN flags discrepancies
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Notices or penalties may follow
Avoid this by:
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Reconciling GSTR-1 and GSTR-3B data before filing
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Using reconciliation tools for accuracy
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Reviewing records monthly
4. Claiming Ineligible Input Tax Credit (ITC)
Claiming ITC without fulfilling the necessary conditions is another major error. This often happens when businesses:
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Claim ITC on non-business or personal expenses
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Claim ITC on blocked credits (e.g., motor vehicles, personal consumption)
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Claim ITC without vendor invoice
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Claim ITC for invoices not reflecting in GSTR-2B
Avoid this by:
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Matching purchases with GSTR-2B before claiming
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Keeping all vendor invoices and payment records
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Avoiding ITC claims for blocked items
5. Wrong Tax Classification (IGST vs. CGST/SGST)
Businesses often misclassify inter-state and intra-state transactions, which affects the type of GST applied.
Example Mistake:
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Charging IGST on a sale within the same state
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Charging CGST/SGST on a sale to another state
Result:
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Incorrect tax payment
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Legal complications or refunds
Avoid this by:
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Understanding the place of supply rules under GST
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Training your team or consulting a GST registration online expert
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Using software with automatic tax-type detection
6. Not Reconciling Purchase Data with GSTR-2B
From January 2022 onwards, Input Tax Credit (ITC) is allowed only on invoices reflected in GSTR-2B, not 2A. Many businesses still check GSTR-2A and claim ITC, leading to rejection later.
Avoid this by:
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Always referring to GSTR-2B for eligible ITC
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Reconciling vendor data monthly
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Following up with vendors who haven’t filed their GSTR-1
7. Filing Incorrect Turnover Figures
Some businesses report turnover incorrectly, especially in quarterly returns or NIL returns, without cross-verifying bank statements or accounting data.
Why it’s risky:
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Can affect your eligibility for QRMP scheme or audits
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May lead to mismatches with income tax filings
Avoid this by:
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Matching turnover data with books of accounts
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Using accounting software that integrates with GST returns
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Avoiding guesswork or manual entries
8. Not Filing NIL Returns on Time
Many small businesses assume that if there’s no business activity, there’s no need to file GST returns. That’s a misconception.
Fact:
Even if you had zero transactions, you must file NIL GSTR-1 and GSTR-3B to stay compliant.
Avoid this by:
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Marking filing dates on your calendar
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Automating NIL filings if possible
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Delegating to a tax consultant or service provider
9. Failing to Report Credit/Debit Notes
Credit and debit notes are used to adjust tax liability or refund amounts. Not reporting them or misreporting them can lead to incorrect tax liability.
Avoid this by:
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Reporting all credit/debit notes in GSTR-1
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Matching them with the original invoice
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Updating your customers accordingly
Final Thoughts
GST return filing may seem overwhelming, especially for small business owners juggling multiple tasks. But avoiding the above mistakes can go a long way in ensuring GST compliance, avoiding penalties, and maintaining peace of mind.
