Common Challenges Faced During GST Filing and How to Overcome Them

Posted In | Finance | Accounting Software | India Accounting Tax

The introduction of the Goods and Services Tax (GST) has brought about a significant transformation in the tax structure of India. While it has simplified the tax system by subsuming several indirect taxes into one, businesses and taxpayers often find it challenging to file GST returns. This article discusses some common challenges faced during GST filing and effective solutions to overcome them.
 

Understanding the Complexities of the GST Structure

The GST structure consists of multi-tier tax slabs and numerous updates, making it complex for many businesses. The slabs range from exempted goods to 28% tax on luxury and sin goods, which requires a deep understanding to classify the goods and services correctly.

Solution: Regular training and workshops can help businesses understand the GST structure. Additionally, using GST-compliant software can automate tax calculations and reduce the risk of errors.
 

Technical Glitches on the GST Portal

Many taxpayers face technical issues while filing GST returns on the GST portal. These glitches can lead to delays in filing returns and even penalties.

Solution: Having an alternate plan like outsourcing GST filing to professional agencies or adopting GST software can be beneficial. These alternatives can provide a hassle-free filing experience and also offer assistance during network issues.
 

Reconciliation of Invoices

Reconciliation of purchase invoices with the supplier's uploaded invoices is another significant challenge. Any mismatch can lead to denial of Input Tax Credit (ITC) affecting the business's cash flow.

Solution: Businesses must ensure regular follow-ups with their suppliers for timely uploads of invoices. Automating the reconciliation process using GST software can also help prevent mismatches and ensure accurate claiming of ITC.
 

Compliance Burden for Small Businesses

Small businesses often find it difficult to comply with the GST rules due to limited resources and understanding. The frequent changes in GST laws add to their challenges.

Solution: Government initiatives like the composition scheme can ease the compliance burden for small businesses. Additionally, seeking professional help can ensure proper compliance without affecting the business operations.

 

While GST filing can be challenging, understanding the GST structure, using GST-compliant software, and seeking professional help can make the process easier. Businesses must stay updated with the latest GST laws and guidelines to avoid any non-compliance and penalties.